This week’s news that Dish (S DISH) aims to launch its online TV service this summer highlighted an interesting factoid: In some cases, big media mergers actually do foster competition — as long as they come with a solid side of regulatory-imposed conditions, that is.
Dish first announced its plans to launch an internet TV service in March, when the satellite operator struck a far-reaching licensing pact with Disney (s DIS). Dish’s plan is to stream a smaller and less expensive package of live TV programming to subscribers unable or unwilling to sign up for a full satellite package. Bloomberg reported this week that the operator is aiming for a $20 to $30 monthly price tag, and that it is targeting younger viewers who prefer to watch their programming on mobile devices. Think of it as pay TV for cord cutters, if you will.
The service won’t be completely unbundled, meaning that consumers won’t be able to pick and choose the three networks they’re interested in watching. Dish’s pact with Disney already called for ABC and ESPN to be part of “an Internet delivered, IP-based multichannel offering,” and Bloomberg explained this week that Dish will have to have contracts with at least two of the four big broadcasters, and at least ten of the highest-rated cable networks, before the new service can launch.
Next up for Dish: signing up NBC
It looks like that second broadcaster will most likely be NBC. That’s because the merger between NBC Universal and Comcast (S CMCSK) in 2011 came with a bunch of conditions imposed by the FCC and the Justice Department, including the requirement to make the same channels it is licensing to traditional cable or satellite operators also available to online video services. In addition to that, NBC is bound to follow the leads of others in this space.
Here’s how the Justice Department put it in 2011:
“In addition, the joint venture must offer an OVD broadcast, cable and film content that is similar to, or better than, the content the distributor receives from any of the joint venture’s programming peers.”
This essentially means that Dish can more easily get access to NBC content for a streaming service because it already has a contract to get ABC. As Bloomberg pointed out, the devil is still in the details, because it’s hard to say what exactly is similar to or better than a Disney channel like ESPN.
Then again, Dish’s deal with Disney gave the network rights to five channels. Add five channels from NBC Universal, and Dish may be just about ready to get its service up and running, at least from a contractual perspective.
Dish isn’t the only company looking to launch an online TV service that streams live programming over the internet. Intel (S INTV) tried the same thing with Intel Media, Sony (S SNE) announced earlier this year that it wants to become a pay TV operator and deliver live TV streams to game consoles, and a few others have at least looked at entering the race as well. Throughout that process, many companies have had talks with networks, and I’ve heard that NBC has generally been the easiest to deal with, thanks largely to these merger conditions.
Merger conditions didn’t prevent the Netflix peering spat
That’s not to say that these conditions have solved all problems. They didn’t, for example, have any impact on the peering spat between Comcast and Netflix, (S FNLX) and it also didn’t stop the company from instating managed services for its own IP video offerings while at the same time imposing bandwidth caps on competing offerings that come to consumers over the public internet. And of course, cable networks like Bloomberg had their own issues with Comcast.
However, if there’s any lesson to be learned from Dish’s negotiations with networks, it’s that the conditions imposed with the Comcast NBC merger have clearly helped in some cases. Speaking of which: The conditions themselves will be in effect until 2018, but with the proposed merger of Comcast and Time Warner Cable, there is the possibility that some of them could be extended, and new ones could be instituted. And if regulators do approve the deal, then those conditions will likely decide if it will hurt or foster competition.