Posts for 'Cable TV Operators'

Despite my own love for my TiVo Series 2 box, not that long ago when I was asked by a friend what the future held in store for TiVo, I responded that with deep regret, I was hard-pressed to envision a happy ending for this plucky little company.

However, that was before last week when I had the opportunity to spend an evening with Jeff Klugman, TiVo’s Senior VP, General Manager of its Service Provider and Advertising Engineering Division and David Sandford, TiVo’s Vice President, Marketing & Product Management, Service Provider and Media & Advertising Divisions.

In addition to this time together, I also saw a presentation and demo of TiVo’s new integrated cable TV digital set-top box offering and also hosted them for a "fireside chat." All of this happened at a CTAM of New England-organized session at a cable TV industry conference in Newport, R.I.

Much as I thought I’d never say this, hear me now: TiVo is going to be the Comeback Kid. And it’s completely clear why. Read on to understand my logic.

Despite all this, TiVo has always suffered from a problem that Jeff Klugman astutely describes: the company has essentially made prospective buyers "crawl across broken glass" to get from purchase decision to completed setup. Such a harsh assessment is well-earned. Consider: first TiVo required the user to find their way to a retail store (or go online) to buy the TiVo box, further cluttering the precious shelf space beneath the TV set. Then it required the buyer to select a monthly service plan that was on top of what the consumer already paid for cable TV or satellite service (to add insult to injury, TiVo did away with its $300 "Lifetime"plan a while ago). This change meant that a consumer’s choice to have a one-time bloodletting was replaced with a requirement that TiVo stick its probe into your credit card for as long as you wished to continue getting the service.

But that wasn’t all. Get the TiVo box home and you faced the oh-so-pleasurable task of contorting your body to access the back of your TV, while fending off that embarrassing swarm of dust bunnies lurking back there, all the while juggling a flashlight to figure out how TiVo’s gaggle of wires should marry up to your existing gaggle of wires. Your persistent fear was that not only might you end up not actually getting TiVo to work, you might find that you irreversibly tampered with your existing set-up, reducing your TV to a snow-and-static haze. Factor in your family members glowering at you while you puzzled through this process and it’s a pretty daunting and ugly picture.

This picture became even uglier when cable and satellite operators introduced a viable alternative to TiVo several years ago: simply pay a few extra bucks to them and you can have DVR features (ok, a sucky imitation of TiVo to be sure) built right into your new digital set-top box. So no contorting, fretting, glowering and of course, no extra box to buy and install.

The sudden popularity of high definition TV brought yet another huge challenge for TiVo. Eventually, as consumers fully understand HD, they will all want an HD set-top box, capable of delivering real HD programming. Right on the heals of HD, people will want DVR features - of course HD-capable. Cable and satellite operators figured this out a few years ago and stepped up by offering their HD-DVR integrated set-top boxes for just a few extra dollars per month.

But TiVo only recently managed to release its own standalone HD-capable box, the "Series 3." And while the box is a marvel of product design, it weighed in with an $800 price tag, a price completely discordant for consumers whose expectations have been set by the fact that DVD players can now be had for as little as $13 at their local Wal-Mart. Coincidentally, it’s worth noting that just today TiVo announced a $300 version of the Series 3, which, while helping relieve upfront sticker shock, still requires the additional monthly service fees. And also the contorting, puzzling and glowering aspects of the installation process.

In fact, the secret to TiVo’s success is, and has always been, jettisoning its hardware business model and becoming a software company. In other words, stop making boxes and instead just license the TiVo software to others whose boxes stand a better chance of being accepted by consumers (i.e. video providers). This was the vision from the start. I recalled reading a trenchant New York Times magazine piece that Michael Lewis (of Liar’s Poker and Moneyball fame) wrote 7 summers ago in August, 2000 on TiVo and Replay, its competitor at the time. I was able to dredge it up (thanks, Google) and in it, Jim Barton, TiVo’s co-founder, and current CTO plainly put it, "We’ll know we’ve succeeded when the TiVo box vanishes."

With TiVo’s promising, but ultimately unfulfilling deal with DirectTV unraveling, the company’s real potential to deliver on its vision lay with making deals with the cable industry. For a variety of reasons not worth recounting here, those deals proved elusive until early 2005 when TiVo struck a deal with Comcast. Things started looking even better for this game plan when the TiVo appointed Tom Rogers, who has significant cable bona fides, as CEO in mid-2005.

Flash forward 2 years later and it is looking increasingly likely that TiVo is on the cusp of executing its original strategy, positioning itself, at long last, for its moment in the sun.

After all these years, a more perfect time for TiVo and the cable industry to get together can scarcely be imagined. The incentives for these deals to succeed are very strong all around.

The cable industry is fighting hard to convince consumers to resist switching to Verizon and AT&T in the communities in which these telcos have rolled out their wizzy new video services. With telcos offering stiff price competition, ARPU (average revenue per unit) growth can only happen through new services, not price increases. Further, Comcast in particular has been working overtime to convince Wall Street that Video-on-Demand is its killer competitive advantage to satellite even while it struggles with its poorly-designed user interfaces which serve to impede, not assist, its subscribers’ discovery of valuable VOD programming.

Enter TiVo. TiVo offers Comcast/Cox/the cable industry one of the best-known and best-loved consumer brands with which to align itself on a de-facto exclusive basis. As mentioned, DirectTV’s deal is over. EchoStar’s relationship with TiVo is toxic due to mammoth patent litigation between the two companies. Verizon and AT&T barely have the resources to get their networks up and running much less take on the challenge of how to integrate their set-top boxes with TiVo software.

Meanwhile, the cable industry continues to grapple with how to get more consumers to sign on for digital cable service. Years after its introduction, digital still remains a sketchy value proposition for many. But TiVo gives cable operators a powerful feature to goose demand. Further, since Jeff showed how elegantly TiVo has incorporated VOD navigation and recording into its UI, integrated TiVo service also offers the promise of addressing that cable operators’ challenge in that area.

Last, but not least, on the assumption that TiVo service will carry an upsell charge of around $3-4 per month to the consumer (which are completely my estimates, with nothing having been disclosed by TiVo or its partners at this point), and assuming 2/3 of that goes to the cable operator, TiVo provides tantalizingly high-margin new ARPU growth for cable operators. Those high margins are made possible through the magic of OCAP, the cable industry’s new standard for remotely downloading applications like TiVo to tens of millions of currently-deployed set-tops (i.e. no expensive truck rolls).

Pick your favorite analyst’s forecast for DVR growth. Forrester, for example believes that by 2011 there will be 65 million DVR homes, up from somewhere around 15-17 million today. So net adds of around 50 million homes. Comcast and Cox together pass about 58 million or 53% of all American homes. So their proportionate share of those 50 million DVR net adds should be at least 26 million. If they market the service right, it’s probably fair to assume that over time, at least 80% of DVR users are going to prefer the TiVo solution to cable’s crummy homegrown DVR alternative (if this option even survives). If so, then these deals’ potential is about 21 million homes taking the TiVo cable service by 2011.

Again, say the TiVo service costs an incremental $3 per month and then assume TiVo keeps a $1 of that, which is my approximation for the combination of its per sub and technology licensing fees. So, eventually 21 million new TiVo homes x $1 month x 12 months. Just from Comcast and Cox that would eventually total $252 million of annual revenue for TiVo. Now factor in when all the other cable operators smell the coffee and abandon their homegrown DVR solutions in favor of TiVo. And then of course it’s inevitable that TiVo will sign up Verizon and AT&T. However in those deals TiVo should be able to negotiate to keep maybe half the monthly fee instead of just a third as they did with the cable crowd (hey, it’ll be a proven service, plus the telcos will be playing catch-up, as usual).

To put all of this in context, for the fiscal year ending 1/31/07, TiVo’s revenues were $259 million, so if the Comcast and Cox deals alone succeed to even a fraction of their fullest potential, they should still have a major impact on the company’s financials. And bear in mind that if the cable strategy succeeds, then along the way TiVo’s retail hardware business would have been euthanized, erasing all that low margin box revenue. What would be left is a high-margin software licensing and services powerhouse, ready to go international, add portable applications and generate all kinds of new features, such ramping up its already solid broadband programming lineup.

But perhaps most important, with TiVo able to track the viewing behavior of all of those millions of homes, its long-held vision of building out an ad-based revenue business based on precise user viewing suddenly seems attainable. Of course it’ll be a little cheeky of TiVo to be pitching agencies and advertisers on these ad services after TiVo all but wrecked their traditional model with its ad-skipping features. But what choice will these folks really have if they want to succeed? And these meetings are already happening, and according to Jeff, who oversees all this, it sounds like all is forgiven and good progress is already being made.

And if they do, then you heard it here first— TiVo is well-poised to become The Comeback Kid.

To make TiVo’s potential more tangible, consider the following 2 scenarios. In both cases you just bought a 42 inch LCD or plasma TV. Of course you now need an HD-capable set-top box. You call Comcast to order one and here’s what should happen:

You’re told that an HD set-top will run you $5.00 more per month than your current box. Then you say you’re interested in DVR capability. "Ah," the Comcast rep says, "have you ever owned a TiVo?". You say "Yes." "Well", she continues, "did you know that you can now get the same (mostly) awesome TiVo service - including the familiar user interface, remote control and blooping sounds as you program the box AND have all Video-on-Demand programming expertly integrated into the service, only from Comcast? It is one of our most popular services, and I can offer it to you today for just another $8 more per month than the HD set-top box you want." You say, "let me get this straight, I’m already used to paying $13/month for my TiVo Series 2 service, so instead of paying that, I would pay $8 per month and get virtually all the same benefits of TiVo, but don’t have to go out and buy another TiVo box? And this isn’t the crummy DVR service I saw at my neighbor’s house that I know you also offer, right?" "No sir, it’s TiVo." "Any other sneaky upfront charges?" "No." "Any disconnect charges if I want to drop it?" "No." "Am I missing something here?" "No." "WOW, sign me up - what a great offer. Thanks Comcast."

You’re told that an HD set-top will run you $5.00 more per month than your current box. Then you say, "I’m kind of interested in this whole DVR thing everyone keeps talking about." After the Comcast rep verifies you’ve never actually owned a TiVo, but that you’re sort of familiar with what it does, she says, "Well, Comcast has a very special offer for you. TiVo DVR service has become one of our most popular services and we think if you experience it for yourself, you’ll see why. So I’d like to offer you 90 days of free TiVo service. If you don’t like it, simply call us at any time and we’ll remotely remove it from your box. That means you don’t need to wait at home for a technician to disable TiVo service for you." You ask what it will cost per month and upon hearing the answer ($8 more per month than the HD box base rate) you make a mental note to ask your friends, neighbors, relatives how much they pay, to see what kind of deal you’re getting (later they’ll confirm it’s the same as they’re currently paying for their Series 1 or 2 monthly plans). You see no downside to trying it, so you do. After you and your family use TiVo for approximately 3 days, you all fall in love with it and wonder how you could have ever lived without it. You call Comcast to say thanks.

Tomorrow morning Charter Communications will announce a redesigned version of Charter.net, the company's portal for its broadband Internet subscribers. I got a sneak preview of the press release and the new site along with a briefing with Himesh Bhise, VP &GM of High-Speed Internet for Charter, who oversees the portal.

According to Himesh, this redesign is the first key milestone for three main themes the company is pursuing for its portal: improved functionality and feature accessibility on its home page, increased video availability and more extensive TV listings.

I'm impressed with the direction Charter's taking. Charter's goals of enhancing the value of its bundle of video and online services is right on the money. I've said for a while that cable operators are potentially going to be the biggest beneficiaries of broadband video because they already have longstanding relationships with cable TV networks and video consumers, plus a huge base of broadband subscribers (Charter has over 2.5 million).

Charter's in synch with this thinking. They've done deals with a range of partners from biggies like Nickelodeon, HBO and FX to smaller ones like IFC, ResearchChannel.org and HAVOC. Charter's bringing selected video clips into its portal and will also offer some exclusive premieres of certain programming. Other cable operators like Comcast, Time Warner and Cablevision are already down this road with similar activities. Charter's initiatives add further momentum to this trend.

While I'm a fan of these moves, I would love to see the cable guys step up their broadband video activities even further. For example, Himesh and I engaged in an interested mini-debate about the definition and value of "exclusive" broadband programming. To me there's an terrific opportunity for cable operators to negotiate and obtain the broadband rights, at least for a defined window, for certain programs exclusively for their Internet subscribers. This would mean their subscribers get video they just can't get elsewhere. (Btw, that's kind of the way the cable TV world used to work until Congress stepped in with the "program access rules" in the '92 Cable Act).

Some kind of exclusive broadband programming would differentiate cable's portals from the Joosts and other next-gen broadband aggregators coming into the market. I think it's inevitable we're going to see some jousting for these kinds of rights, especially as things get more competitive.

Terry Semel's departure as CEO of Yahoo has again raised speculation that Yahoo is acquisition bait. Of course this rumor's been flying for ages. So here's my point of view: Comcast should acquire Yahoo. And they should do it now.

Some of you will recall that in my September, 2005 e-newsletter, "Why Comcast Should Acquire AOL" I laid out the case for Comcast to push aggressively into the online media business. At the time I thought an acquisition of AOL would be a bold stroke. While I had no inside knowledge of Comcast's plans, shortly afterwards it came to light that Comcast had indeed sniffed around AOL. Now, again, I have no knowledge of Comcast's possible interest in Yahoo, but it wouldn't surprise me if we saw something surface soon. It would be a very smart deal for Comcast. Following are my 5 key reasons. Judge for yourself.

1. The offensive case: Comcast needs more exposure to the online media business

Comcast is a company that urgently needs more long-term exposure to the online media business. In the last few years online usage and online advertising have exploded. A more recent category of burgeoning growth is of course, broadband-delivered video. I believe the trends around both online and broadband usage are only going to gain further momentum in the years ahead.

To see why, it is critical to understand the shift in media consumption patterns occurring among young people today. As one data point, JupiterResearch recently reported that online users under 35 spend more time online than watching TV. Meanwhile Magid just released figures showing that 80% of 18-24 year old males watch broadband video at least once a week, with 35% watching on a daily basis.

Today's young people live online. There is scarcely an aspect of their lives (except sleeping, eating, and other obvious activities) that they do not look to the Internet and mobile technologies to fulfill for them. All of this activity has also fueled their general product/service expectations. Accustomed to significant personalization, choice and price competition, this group is going to be the toughest customer base to please and the least tolerant of products/services that don't meet their specific needs. How does all this relate to cable? I believe that when many young people set up their own apartments, they will increasingly conclude that cable operators' basic programming tiers do not meet their personalized needs and will be looking online for programming alternatives.

Any company in the media or related industries that is not positioning itself squarely in the middle of the online media space, and broadband video in particular, is making a huge mistake. Some of you have heard me say this before: when companies get on the wrong side of fundamental changes in customer behavior, they are sure to meet with peril in the future. For just one example, consider the catastrophic state the U.S. auto industry now finds itself in because it failed to understand shifting consumer tastes 30 years ago (tastes which Japanese makers grasped and have mercilessly capitalized on).

To be fair, it's not as if Comcast has ignored online media and broadband video. It has acquired thePlatfom and Fandango, has started Ziddio and will soon be launching Fancast. And its Comcast.net portal gets strong traffic. However, I believe that even when all these activities are combined, they do not give Comcast enough exposure to online media.

A Yahoo deal is all about Comcast being positioned properly and with the right scale to exploit the inexorable shift to online and broadband usage. Alternatives that do not do so as quickly or forcefully are by definition sub-optimal.

2. The defensive case: Comcast must pre-empt another Yahoo acquirer

As important as the offensive case is for Comcast, the defensive one may be even stronger. Comcast simply cannot allow Yahoo to fall into either Microsoft's or (heaven forbid), Google's hands (though that prospect would face steep FTC objections).

To see why this is so important it is necessary to understand a fundamental change happening in the media business, which is that the economics of media are rapidly shifting away from consumer-paid models (i.e. subscriptions, a la carte purchases, etc.) toward ad-supported models.

There are at least two important and interrelated reasons for why this is happening. First, the efficiency and effectiveness of the advertising business are both improving dramatically. Online targeting technologies (search/keyword, contextual, behavioral and other mechanisms) enable marketers to get unprecedented returns on their spending. As marketers spend more online and compete with each other for limited high-quality ad inventory, publishers in turn are able to monetize their content better than ever. This dynamic is the backstory behind online advertising's resurgence. I believe it is not only going to continue, but quickly spread into the video business, which has, to date, been well-insulated from the Internet revolution.

The second and interrelated reason for the shift in media economics is that various technologies (digitization, storage, bandwidth) are all making it lower-cost (and in some cases, virtually no-cost) for companies to provide at least an introductory tier of their services for free. With costs so low, it is possible for providers to employ much more flexible business models and still generate adequate financial returns.

As a result, a genuine pattern is developing whereby traditionally premium services (i.e. those paid for by consumers) are becoming free, either with ads, or in some cases, without. The examples abound. Start with my favorite - online access to broadcast TV programs. Just over a year ago the only way to watch a broadcast program online was to buy it, likely at iTunes. Now over 40 hit broadcast programs are freely available - on an ad-supported basis - with more coming all the time. Broadcasters have quickly recognized that advertising is a far better business than paid downloads.

There are plenty of other examples. You can now make a 411 call without charge, courtesy of Jingle Networks and others, supported by ads. Or get an email account with unlimited storage for free, with ads. Or send receive a free fax. And the list goes on.

Given all of this, I believe that an important future competitive advantage in the media industry (in fact, quite possibly, the most important competitive advantage) will be expertise in content monetization through increasingly sophisticated advertising mechanisms. Companies that have this capability will be the media industry's ultimate winners. Of course, in search, that's the position that Google has expertly dominated to date, driving its lofty stock price. And by the way, Google and Microsoft have each just doubled-down on this advertising theme, recently spending a combined $9B to acquire DoubleClick and aQuantive respectively (which had combined revenues of less than $600 million in 2006).

So stop and consider a company like Comcast, which in 2006, generated about 60% ($15.1B) of its overall revenues from cable TV subscriptions. High speed Internet kicked in another 20% ($5B), voice 3.6% ($913M), programming networks (all TV-based) 4.2% ($1.05B) and local advertising 6.1% ($1.5B). By my calculations, Comcast's ratio of consumer subscription revenue (cable + Internet access + voice = $21B) to advertising revenue (programming + local advertising = $2.55B) is around 8:1 (note I didn't deduct affiliate fees its programming networks take in). That means that as cable TV networks inevitably offer more of their programming for free to consumers (which is already happening in the recent Joost deals) and more content choices are available through broadband , Comcast's cable TV subscription business becomes increasingly vulnerable and along with it, Comcast's overall financial health.

So if you buy my logic that content monetization through ads is critical, that Comcast doesn't have enough expertise in this area and that its current subscription TV business is vulnerable long-term, the question becomes how does Comcast re-position itself to compete properly down the road?

Could Comcast build out its own content monetization and advertising capability? Sure, anything's possible. But consider how long Yahoo itself (with its deep roots in Internet search) has been laboring over Panama (its next generation ad system) just to gain parity to Google and you get a sense of the enormity of the challenge. An alternative would be for Comcast to partner for this capability. That's possible too, but sub-optimal. If you believe that content monetization is going to be as critical in the future as I do, how could a company with Comcast's reach not have this as a core internal competency?

So here again, a Yahoo deal would not only give Comcast these crucial capabilities, but also preclude another company from gaining access to Yahoo's content monetization technologies and skills. This would remove the threat of that company competing more strongly against Comcast in the future.

3. Yahoo enables Comcast to become THE next generation video aggregation leader

Acquiring Yahoo would allow Comcast to take a leadership role as THE next-generation, cross-platform video aggregator. This is the most exciting reason for the acquisition. As content distribution continues to shift to broadband delivery, there are going to be innumerable new competitors to Comcast, each offering a different consumer value proposition. One thing is for certain - each and every one of them is going to be freely riding Comcast's (and other cable operators') broadband pipes into users' homes.

I have written about these "over-the-top" or "cable bypass" services in the past, and they represent a real long-term threat to Comcast and others. Sure, very few people are dropping their cable subscriptions today to cobble together broadband content in bits and pieces. However, I can tell you anecdotally, judging by the number of friends OUTSIDE the industry who have asked my opinion, there is significant consumer interest in dropping cable service and piecing together a more personalized lineup.

To defend itself, Comcast is in a unique position - able to both deliver standard and high definition digital TV signals to a set-top boxes and also IP-based, broadband video to over 10 million high-speed Internet subscribers today, and growing. There are very interesting bundling opportunities between these services, which will offer far greater value to Comcast subscribers, but at little additional cost to the company. In addition, there are unique ways for the company to use broadband to offer enhanced distribution to programmers eager to expand their share of Comcast's subscribers' viewership.

The key to defining this next-generation aggregation role is for Comcast to have a robust Internet suite of services and capabilities to build from and tie into. Succeeding in the video aggregation business in the future is going to be about far more than piping channels into consumers' homes. Rather, it's going to be about wrapping all kinds of related services, interactive/social networking capabilities and advanced advertising around the core video. So one capability that I described above that is needed is content monetization through ads. But there are many others, among which Yahoo has significant market shares. These include email, social networking, photos, travel, maps, jobs, personals and others. Marrying some or all of these to Comcast's current services, particularly at the local level, will create new and highly differentiated video offerings that "over-the-top" providers will be hard-pressed to match.

In short, Yahoo gives Comcast a whole new range of services to leverage in order to become THE leading next-generation video aggregator.

4. Yahoo gives Comcast a much-needed international presence

In the old days, a cable operator thought it was becoming international when it decided to add Telemundo or Univision to its channel lineup. (You think I'm joking!)

Today, being an international company means tapping into fast-developing economies all over the world. It is a simple fact that in developing economies, tens of millions of people are joining the middle class, bestowed with newfound spending power. This of course is why there are daily announcements from American companies trumpeting their new international ventures.

Yahoo and all the other major Internet companies have recognized this, operating essentially borderless businesses and offering their services in multiple languages. Yahoo has hundreds of millions of international users and in 2006 generated over $2B in international revenues. It provides its service in over 20 languages and has offices in over 20 markets around the world.

Comcast, on the other hand, offers its services only in America. It's tempting to say that's OK, since the markets in which Comcast operates are fundamentally local and have been mainly insulated from international competition. Yet, when you look at households across America, there are at least three concerns. First is that Comcast passes a defined number of them, so its addressable market is limited. Second is that there is real spending fatigue in many homes. Both of these diminish opportunities for top line revenue growth for services cable operators offer. Finally, with the spread of digital distribution technologies, Comcast faces new video competitors from all over the world vying to deliver video to homes within Comcast's footprint.

So sure, adoption of voice services is currently driving double-digit cash flow growth for Comcast and others, but how long will that last? These new revenues represent a market share shift from telcos, not new net market growth. They are nothing to sneeze at, but telcos are preparing their own market share assault on cable's video customers. And then of course there are wireless broadband services like WiMax, which will inevitably cut into Comcast's (and others') current market shares.

International exposure would provide Comcast with a whole new growth story. And Yahoo would provide this platform immediately. And by the way, there's another angle on international expansion. For anyone paying attention to the raging immigration debates here, our own American communities are becoming more and more ethnically mixed themselves. So for example, wouldn't it be cool for Comcast to have access to advertisers in China who want to insert their ads on Comcast's cable systems here in the U.S.? As the world becomes a global village, Comcast needs to fully participate in it.

5. Comcast needs more technology DNA, Yahoo provides it

Last but not least, Comcast needs more online and technology DNA in its culture and Yahoo can provide it. Mind you, I know many outstanding people at Comcast who are totally immersed in the online and broadband realms. However, they are an island in a sea of thousands of customer service reps, field technicians and operating executives steeped in the cable business. In fact, virtually all of Comcast's senior management team comes from within the cable industry, if not from within the company itself. To fully capitalize on its online and broadband opportunities, Comcast needs more people with more perspectives. People who aren't rooted in the core business and the traditional way of doing things. People who have more experiences operating within the very companies Comcast will increasingly be competing against.

As well, Yahoo would also bring Comcast access to the Silicon Valley ecosystem and culture of innovation. While there are plenty of other pockets of innovation around the U.S. and the world, the Valley is still the epicenter of the action and Yahoo's right in the middle of it. Becoming immersed in this culture would allow Comcast to learn first hand about the faster development cycles that characterize Web 2.0 initiatives and pull those talents into the company. This may seem like soft stuff, but building corporate cultures attuned to larger market circumstances is critical for all companies to succeed. Though Yahoo is already a Comcast partner, this relationship, no matter how strong, will never be sufficient to change Comcast's DNA.

Wrapping Up

OK, that was a mouthful. Obviously I think there are many compelling reasons for Comcast to go forward. Less clear is whether Yahoo would be interested. New CEO Jerry Yang obviously loves this company - he's not only a co-founder, he's stayed around all these years. So he'd likely be a reluctant seller. Susan Decker gets rave reviews and would likely want her turn to run the show. That said, shareholders are restive and their recent action clearly help stir the waters for Terry Semel's departure. So at the right price, shareholders would probably be motivated sellers.

So let's say Yahoo is willing. Could Comcast win this deal, particularly when there would likely be a spirited bidding war? Clearly Comcast would need to bring a full wallet to compete with the likes of Microsoft and others. Today Comcast's market capitalization is about $87B, while Yahoo's is currently around $37B. So say it takes a 30% premium to win the company. That's a deal worth around $50B. In short, a very big bite for Comcast, and very dilutive, given Yahoo's '06 revenues were a little over $6B (compared with Comcast's $25B). However, I'm a believer that Yahoo stock isn't going to get any cheaper. Despite its recent woes, Yahoo is a tremendous franchise that would be virtually impossible to replicate. If Comcast is going to make a move, it should do so now.

A key to success would be Comcast messaging the deal properly to the Street. Comcast did a disastrous job at this with its Disney bid in 2004, which not only failed, but cratered the stock for a long time after. Having the Street's support, in the form of a sturdy Comcast stock price, would be very important to Comcast's success.

Let's see how things play out.

Today’s panelists reinforced my thinking that these would-be bypassers are in for a tough fight. Bill pointed out that since operators own their own networks, they can deliver quality-of-service (QOS) that others can’t. This is especially important when it comes to delivering really big Blue-Ray or HD-DVD files. Meanwhile, Jim reminded all of us that “most favored nations” clauses in most cable networks’ carriage agreements with operators will be keeping plenty of lawyers busy just determining if networks can even make deals with the upstart broadband video aggregators.

The broadband video aggregation area is going to be very interesting to watch…..

Comcast’s acquisition of Fandango is just off the wire, and my quick take is that it’s a winner for both companies.

From Comcast’s perspective, it looks like Fandango is going to anchor a new site named Fancast, which the company announced today as well, which will launch this summer. Comcast has been the sleeping the giant of the broadband video space. Though its Comcast.net traffic has grown strongly, the company has stood by while YouTube, MySpace, Apple, Amazon and others have pioneered new and important ground in delivering video over the open broadband Internet.

This paragraph from the press release was key:

“Fancast, which will launch this summer, will be a national entertainment site where people can search and discover television and movie content, while managing their viewing experience across multiple devices. With Fancast, consumers will be able to search for their favorite shows, movies, actors and actresses, or simply enjoy the video content on the site. Fancast will provide consumers with a place to discover when their favorite shows or movies are "on," and where they can view them via television, video-on-demand, online or on other device.”

My bet is that Fancast is a going to be a video-rich site that will also incorporate assets from E!, which is also a Comcast property. Everyone I speak to at the portals says that entertainment/celebrity-oriented material is their best-viewed video. Comcast has a great shot at defining a new entertainment portal that can also serve content to disparate devices. With Comcast (and other MSOs) now moving in the quad-play direction, thinking about video on screens other than just the TV, is critical. It’s great to see Comcast joining the action.