Comcast isn’t planning to launch a national streaming service like DirecTV Now or Dish’s SlingTV at this time, but they’re acquiring rights so they could do so in case the streaming market takes off. These rights, which they’ve picked up through broader contract negotiations and most-favored-nation clauses (which let them sell channels in the same places as other new providers), would let Comcast stream channels nationally for the first time, and would be needed to launch a national streaming service. However, as Bloomberg’s Gerry Smith reports, they don’t have these rights with every channel yet; CBS and ESPN are major omissions.
Cable providers need to negotiate separate rights from programmers to sell bundles of their channels beyond their territories. Programming deals last for several years, so it makes sense that Comcast would want to secure the broadest rights possible in case business plans change, the person close to the company said.
Comcast hasn’t secured OTT rights from some partners with which it has long-term deals, according to people familiar with the matter. The company last negotiated an extension with CBS in 2010 and with ESPN in 2012. Neither deal expires before 2020. If Comcast decided to expedite plans for a nationwide TV service, it would need to renegotiate those contracts.
That wouldn’t necessarily be a huge hurdle. As Smith relays, BTIG analyst Rich Greenfield wrote in a report last year that Comcast could likely get deals done given their scale, saying “This should not be terribly challenging for Comcast based on their level of importance to programmers today.” Still, Comcast would probably have to make some concessions in order to pick up those rights for CBS and ESPN, and there’s no reason for them to do so now if this is still just a hedge. Smith quotes Comcast EVP Matt Strauss on that front:
“When you really try to evaluate the business model, we have not seen one that really gives us confidence that this is a real priority for us,” Matt Strauss, Comcast’s executive vice president for video services, said at a conference in November. “There is significantly more upside and profitability in going deeper and deeper into our base first versus following a video-only offering OTT,” he added, using the industry term for nationwide online video.
So, if those comments are accurate, Comcast isn’t likely to take this too far right now. But it’s interesting that they are acquiring some of these rights, and piecing together some of what would be needed to launch a service to compete with OTT providers (which currently include not just other TV companies like Dish and DirecTV, but also Sony, and will soon include Hulu and Google). It may be a hedge for now, but if the OTT market grows, Comcast may decide it’s worth trying to grab its own piece of the pie. (And their next step would probably be trying to gain these rights from CBS and ESPN.)
What could this mean for sports fans? Well, for the moment, not very much. It’s not really relevant to viewers if Comcast has rights to stream nationwide if they’re not going to use them. However, if they do opt to launch their own national streaming service at some point, that could be a boon for sports fans. The current OTT services have had some significant technical issues (especially DirecTV Now) and some issues with sports networks being absent or games being blacked out. A new entry into the market could provide more competition and more options.
It should also be noted that Comcast is offering some streaming right now within its footprint (including major cities like New York, Philadelphia and Chicago), offering some channels through Roku devices instead of traditional cable boxes and offering streaming “skinny bundles” of small channels. Dipping their toes into the water that way might help them decide if they’re interested in pursuing this on a national scale. This will be worth keeping an eye on, but if the pool of streaming customers does become bigger, Comcast may dive in.