Welcome to the Age of ‘Every Media Giant for Itself’By
I thought news was supposed to slow down before the holidays. But the events of last week may impact how we use the internet and what kinds of content we’ll access on it, for years.
On Thursday, the Federal Communications Commission voted 3 to 2 to overturn net neutrality rules that barred telecommunication companies from favoring one set of internet services over another. On that same day, Walt Disney Co. agreed to a blockbuster $52.4 billion deal for 21st Century Fox Inc. that, if approved by regulators, will allow it to take over Fox’s fabled movie and TV studio, an assortment of cable channels and a range of cinematic franchises, from Avatar to the X-Men.
Whichever side you fall on with respect to net neutrality and mergers between corporate Goliaths, it’s hard to imagine that either move prioritizes the interests of consumers. FCC Chairman Ajit Pai and his fellow conservatives want to tip the balance of power away from Silicon Valley giants like Google and Facebook Inc., and toward internet service providers such as Comcast Corp. (owner of NBC and DreamWorks Animation) and Verizon Communications Inc. (owner of Yahoo and now streaming rights to the NFL.) They believe, despite a vociferous public outcry and voluminous arguments to the contrary, that without regulatory shackles, these companies will invest more in broadband and roll out new kinds of internet services to their customers.
Meanwhile, Disney CEO Bob Iger recognizes that Netflix and other streaming sites are reordering the entertainment universe. He’s making a humongous bid to amass enough content to create his own direct-to-consumer streaming service, where he can keep subscribers paying a monthly fee and happily watching Star Wars, the Marvel movies and new episodes of TV shows like Criminal Minds.
Both of these developments conjure a somewhat haunting vision of vertically integrated giants, sitting atop deep archives of popular content and controlling everything from the creation of that material to its distribution into people’s homes. It’s the kind of corporate synergy that might be extremely profitable for the companies but is almost certainly going to be a bummer for customers.
To create its own streaming hub, for example, Disney will likely be inclined in the long run to pull its Marvel TV shows from Netflix, for example, and hold its films off of Time Warner Inc.’s HBO during the premium-TV window. If that happens, you can forget about the films and TV shows produced by Universal Studios, owned by Comcast, from showing up on Fox-owned cable networks like FX. Now imagine Viacom pulling Nickelodeon off Comcast and CBS creating a whole new version of Star Trek but declining to actually air it on regular television. (Wait a sec; that one is already happening.)
This era spells certain doom for Hulu, the third-most popular streaming service in the U.S. Hulu is a joint venture between Disney, Fox, Comcast and Time Warner—the kind of corporate collaboration that seems to be going out of style. Disney-Fox will likely try to buy out its partners and use Hulu as its in-house streaming vehicle, or it will pull out altogether in favor of creating a new site from scratch.
I fear that in this new world, it will be harder—and more expensive—to find what you want to watch and that the telecom-media giants that control the broadband pipes into our homes will be tempted to favor their own services, while hobbling rivals’. I realize it sounds dire (though not as dire as some prognostications). But it’s also the logical result of a new era that was born last week: It’s every media giant for itself.
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