The Federal Communications Commission's decision Wednesday to close the so-called "terrestrial loophole" could mean the agency may be looking for even greater concessions in Comcast's pending NBC Universal joint venture, according to influential Sanford Bernstein cable and satellite analyst Craig Moffett.
The FCC voted 4-1 Wednesday in favor of closing the loophole, which allowed cable operators to keep their regional sports networks off competitors systems as long as they were transmitted terrestrially. The ruling could mean that once-exclusive operator-owned RSNs like the Comcast Sports Network in Philadelphia would have to be made available to satellite and telco competitors.
In a research note Wednesday, Moffett wrote that the ruling could be a boon for DirecTV, which has half the penetration rate in Philadelphia (16%) than it has across the country, largely because it is unable to carry CSN.
However, Moffett said that the overall subscriber impact on Comcast would be relatively small. Moffett estimated that there are about 3 million homes in the Philadelphia DMA, adding that a 15-point swing in market share would amount to about 450,000 subscribers, over a number of years. Comcast has about 24 million customers across the country.
More important, he said, is the message the FCC appears to be sending to Comcast regarding its pending deal with General Electric to gain 51% control of the NBC Universal joint venture.
"We, like many others, had initially expected closure of the terrestrial loophole to be an important condition of approval for Comcast's acquisition of NBC Universal," Moffett wrote. "By accelerating action to close the loophole - even before Comcast has filed for approval for the NBCU deal with the FCC - the FCC has made clear that the terrestrial loophole will not be ‘counted' as a regulatory concession. There could be no clearer signal that the FCC is looking for bigger concessions than this in order to approve the NBCU deal."
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