The Comcast Empire Strikes Back

The enormous financial and popular success of Netflix's movie and TV streaming finally roused the ire of cable companies. Comcast finally struck back at Netflix's most sensitive area -- low-cost distribution into viewers' homes and computers. This commercial struggle is just warming up, and promises to be a slugfest along the lines of King Kong vs. Godzilla.

The corporate behemoths lining up their K Street dream teams would headline a Fortune (name your number) list. Hedge fund darlings Google and Apple, investment banks, and telecoms will step into the struggle. Media black hats, such as Comcast, Disney, and Fox will join in the fray. (The mainstream media's point of view on this conflict should be a fascinating study.) The feds will have their say. Oh, yeah, there's Netflix, playing the aggrieved party angle for all the sympathy it can muster. (I don't buy the strong version of Netflix's "purity" in this tale.)

Comcast's position is a delicate one. The Comcast/NBC merger has not yet been consummated. A number of observers found the concept of a big-time, monopolisitc cable player owning one of the major networks as inevitably inimical to unencumbered access to consumers. Of course, no cable firm wants, encourages, or welcomes competition. The success of Netflix's streaming product has shown that the public prefers entertainment choice to the free crap, subscription plan junk, or hardly better pay-per-view movies cable providers shove down their captive audiences' throats.

What's worse, from the cable providers' perspective, is that Netflix isn't paying very much for this access into people's homes, computers, and phones.

As a consequence, the Comcast empire has challenged Netflix by charging a "toll" for access. Zero Hedge, which took the story from Bloomberg, provides some of the dirt. The post from Nikki Finke adds some legal background; the reader comments are often thoughtful and often appear knowledgeable.

This story will be a long, complicated one. It's a story that will require some diligence to understand, as the media will have a profound stake in its outcome. That assertion suggests a reader has to question every point of view, check every fact, anticipate sudden shifts in declared positions, and have a taste for human weakness. The reward will be a heightened understanding of how we will obtain useful or trival information, and how much we'll pay for the privilege.

The chart above shows the value of Netflix common stock since January 2010; the chart on the right compares Comcast (blue) versus Netflix (green) since the beginning of this year.