Comcast looking to unload its stake in A&E Television Networks

Comcast Corp. has put the wheels in motion to sell the bulk of its small but valuable stake in A&E Television Networks whose holdings include cable channels A&E, History and Lifetime.

In a filing at the Securities and Exchange Commission, Comcast said its programming unit NBCUniversal had exercised an option to unload a "substantial portion" of its interest in A&E Television Networks to Walt Disney Co. and Hearst Corp., the other partners in the venture. Comcast has put the worth of its 15% stake in A&E Television Networks at $2 billion. Disney and Hearst each own 42.5% of the company.

The move is not surprising as NBCUniversal had to eventually sell its piece of A&E Television Networks. In 2009, NBC had owned 25% of A&E Networks. However, that stake shrank by almost half when Disney and Hearst Corp. -- co-owners of Lifetime Television and its sister channels -- merged those networks into A&E Networks. When that agreement was reached, part of the deal called for NBC to exit the partnership within 15 years.

In its filing, Comcast said it expected an agreement to be reached on the value of its equity interest during the second half of this year.

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Photo: A billboard for Lifetime's new show "The Client List." Credit: Lifetime

Comcast continues to rally in FCC dispute with Tennis Channel

Cable giant Comcast Corp. appears to be headed for a tie-breaker in its long-running dispute with the small, independently owned Tennis Channel.

In December, a Federal Communications Commission administrative judge issued a tentative ruling that Comcast had discriminated against the Tennis Channel by putting it at a competitive disadvantage.

After winning that ruling, the Santa Monica network demanded that Comcast immediately add the channel to Comcast's most widely distributed programming package. The move, which Comcast has been resisting, would make Tennis Channel available to nearly all of Comcast's 22 million cable subscribers. 

But on Wednesday the FCC general counsel said that the full FCC would decide the matter and that Comcast was not required to move Tennis Channel at this time.

The dispute, which began nearly three years ago, centers on Comcast's refusal to move the Tennis Channel to a less exclusive environment.

The Philadelphia company has said it placed the Tennis Channel in the sports tier as part of an agreement between the two companies when Comcast agreed to provide carriage.  However, Comcast appeared to run afoul of the rules because it offers the sports channels that it owns, the Golf Channel and NBC Sports (formerly known as Versus), in the basic programming package.

The Tennis Channel has argued that its location unfairly limits its revenue potential because channels receive fees from cable operators based on number of subscribers. 

If Comcast loses the case, it would be the first time that a cable operator was found in violation of federal anti-discrimination program carriage rules, which were established by the agency in 1993. Comcast lost a similar dispute Wednesday, this one with Bloomberg. 

On Wednesday, the FCC General Counsel Austin C. Schlick said the full commission should settle the Tennis Channel score.  It was not clear when the commission would make the final call. 

"The interim stay granted by the Office of General Counsel regarding the Tennis Channel is a welcome development, and we hope the full commission will follow suit," Comcast said in a statement. "There were procedural and substantive flaws in the [administrative judge's] decision, and we continue to believe it should not be upheld."

For its part, the Tennis Channel said the interim stay didn't change the administrative judge's findings. Instead, it was "simply a continuation of the status quo while the commission decides the procedural question.... We are pleased that the commission continues to move forward in resolving this dispute." 

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Photo: Tennis Channel's Bill Macatee and Martina Navratilova, center, interview Ana Ivanovic. Credit: Fred Mullane 

FCC finds in favor of Bloomberg in fight with Comcast

The Federal Communications Commission has ruled in favor of Bloomberg Television in its bitter fight with Comcast Corp. over where its business channel was carried on the cable giant's systems.

In a ruling issued by the agency's Media Bureau late Wednesday afternoon, the FCC agreed with Bloomberg that Comcast is required to place the business network in the same neighborhood as other news channels, particularly those owned by Comcast, including CNBC and MSNBC.

"We agree with Bloomberg that the plain language of the condition suggests that the commission intended that the condition would apply to Comcast’s existing channel lineups," the FCC said. 

The commission went on to direct Comcast to put Bloomberg in the same neighborhood as other news channels in any top-35 market where such neighborhoods exist in the next two weeks.

The FCC defines a neighborhood as "a grouping containing four news or business news channels within a cluster of five adjacent channel positions." For example, if channels 20, 21, 22 and 24 are occupied by CNN, MSNBC, CNBC and Fox News, that would be a neighborhood even if channel 23 has a different format. 

Bloomberg had argued in complaints filed with the FCC that Comcast was playing favorites with its own channels at the expense of Bloomberg. This was a concern Bloomberg expressed when Comcast first announced its plans to acquire control of NBCUniversal, the entertainment company that owns MSNBC and CNBC.

Comcast argued that the FCC condition applied to any future news neighborhood, not the lineup of its channels before the deal with NBCUniversal closed. Comcast also accused Bloomberg of using the merger to try to get special treatment for its network. If Comcast did what Bloomberg wanted, the cable company said last year, "millions of customers will be subject to disruption and confusion required by massive channel realignments across the country, all to benefit an already-thriving, $30-billion media company."

In a statement, Comcast said it would appeal the Media Bureau ruling to the FCC chairman and the other commissioners.

"We respectfully disagree with the Media Bureau's interpretation of the 'neighborhooding' condition, which so clearly rewrites the history and any permissible underlying rationale for the condition," Comcast spokeswoman Sena Fitzmaurice said. "Since by definition, no 'discrimination' against Bloomberg in favor of CNBC could have taken place before the NBCUniversal transaction, any retrospective condition on this subject would have been arbitrary and capricious."

The neighborhooding condition only applies to news channels that compete with Comcast-owned networks, not other channels. The FCC said it did this “in accordance with the special importance of news programming to the public interest." However, an entertainment channel that competes with a Comcast network and is angry about where it is located on Comcast cable systems, can't complain to the FCC.

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Comcast profit jumps 30%, with mixed results at NBCUniversal

Comcast Corp.'s earnings jumped nearly 30% in its first quarter as more customers signed up for high-speed Internet service.  But the cable Goliath also showed strength in some an unexpected quarters: the long-lagging NBC broadcast unit and Universal Pictures, which released two hit movies, including "The Lorax."

For the quarter ended March 31, the Philadelphia-based company said its net income grew to $1.22 billion, or 45 cents per share, from $943 million, or 34 cents per share, from the year-earlier period.

Comcast generated consolidated revenue of $14.88 billion -- an increase of 23%.

"I'm really pleased with our start in 2012," Comcast Chief Executive Brian Roberts said in a Wednesday  morning conference call with analysts.  "Cable had another outstanding quarter.... We are starting to make some progress in broadcast."

NBCUniversal revenue was up 18% to $5.5 billion, in large part because the NBC broadcast network raked in $259 million in Super Bowl advertising revenue. (Excluding the Super Bowl, revenue at NBCUniversal was up 12.4%).

Roberts reminded analysts that NBCUniversal results would be volatile because of the hit-and-miss nature of movie box office and higher television programming costs. Comcast has been spending more on programming to try to lift the peacock network to profitability.

Operating cash flow at NBCUniversal was up 34.3% to $813 million compared to the first quarter of 2011.  In terms of revenue, NBCUniversal cable networks generated $2.1 billion in revenue versus $2 billion in the year-earlier period.  The NBC broadcast unit pulled in $1.85 billion in revenue (including the Super Bowl) compared to $1.35 billion in the year-earlier period. Film entertainment revenue swelled to $1.19 billion from $975 million in 2011. Theme parks generated $412 million, up from $390 million.

However, the company's operating cash flow margins were lower at cable networks due to higher programming and production costs, including those for NBA basketball. The broadcast unit posted an operating cash flow loss of $10 million, reflecting higher programming costs and higher marketing expenses to support the launch of mid-season shows, including "Smash."

"We're starting to make some progress but there is a long way to go," NBCUniversal Chief Executive Steve Burke told analysts. "And in film, we have a much stronger slate this year." Among Universal's upcoming film titles are the big budget action film "Battleship," the dark fairy tale "Snow White and the Huntsman," and a new iteration of the successful "Bourne" series.

Comcast is the nation's largest cable television and high-speed Internet provider. It holds a 51% controlling interest in NBCUniversal. 

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Photo: Comcast Cable company trucks in Southern California / Credit:  Bob Chamberlin / Los Angeles Times.

Comcast in latest complaint says Bloomberg lied to FCC

Comcast Corp. has accused Bloomberg LP of lying to the government in the latest twist in the battle between the two media behemoths.

Last month, Bloomberg said in a filing with the Federal Communications Commission that Comcast was ignoring the conditions that the regulatory agency put on the cable giant as part of approving its acquisition of NBCUniversal. Comcast told the FCC on Tuesday that the charge was "demonstrably false."

The specific issue is where Bloomberg TV is placed on the cable dial in relation to Comcast's CNBC. Bloomberg has argued that as part of the FCC's approval of the deal, Comcast is required to put Bloomberg TV near CNBC and other news channels. Comcast has countered that it only has to do that if it were to start placing similar channels next to each other on the dial, a practice known in the industry as "neighborhooding."

In April, Bloomberg sent a letter to the FCC charging that Comcast in fact had created new neighborhoods for news channels on cable systems it owns in Crescent City, Fla., and Claxton, Ga., without moving Bloomberg TV. "Comcast is favoring its own programming content and discriminating against competitors," Bloomberg told the FCC.

On Tuesday, Comcast said neither of the accusations were accurate. In its response to Bloomberg, Comcast included a declaration from Michael Davies, an area vice president for the cable company's southeastern holdings. He denied Bloomberg's claims that between 2011 and 2012 it created a neighborhood of news channels that included Comcast's CNBC and MSNBC along with CNN and Fox News channels. Those channels, he said, had been together prior to the Comcast-NBCUniversal deal closing.

In Crescent City, Fla., Comcast said not only did it not create a news neighborhood, but that some of the channel's Bloomberg said were held by news networks were actually held by other entertainment channels.

"Bloomberg’s continued presentation of erroneous facts should further call into question the basis for its complaint," Comcast told the FCC.

In its response, Bloomberg said it had used Comcast’s own reporting of its channel positions to Tribune Media Services, which produces television listings and on-screen programming guides as the basis for its accusations.

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Top Comcast executives take a pay cut in 2011

Comcast Corp.’s highest-paid executives — Chief Executive Brian Roberts and NBCUniversal Chief Executive Steve Burke — experienced compensation deflation last year.

Roberts’ pay package shrank 13.3% in 2011 to $26.9 million. That included a performance-based cash bonus of $5.5 million for the 52-year-old executive.

Meanwhile, Burke’s compensation dropped a whopping 32% to $23.7 million, which included a performance bonus of $6.7 million. The 53-year-old executive’s amount fell dramatically in 2011 as it was the first time in three years that he did not collect a signing bonus.

Burke, who took over management of NBCUniversal last year when Comcast acquired controlling interest in the company, received bonuses of about $10 million in both 2009 and 2010 for extending his contract.

The compensation, disclosed Friday in a proxy filed with the Securities and Exchange Commission, put the managers of the Philadelphia-based cable and entertainment giant in the middle rungs of corporate pay across big media conglomerates.

By comparison, CBS Corp. Chief Executive Leslie Moonves received a package valued at $69.9 million last year, Discovery Communications Chief Executive David Zaslav received $52.4 million; Viacom Chief Executive Philippe Dauman captured $43 million, Walt Disney Co. Chief Executive Robert Iger collected $31.4 million, and Time Warner Inc. Chief Executive Jeffrey Bewkes got $25.9 million.

Three years ago, Comcast’s top executives agreed to a four-year freeze in their base salary. Roberts’ base salary was $2.8 million; Burke’s was $2.24 million.

The top Comcast executives could have received fatter packages last year. The company achieved substantial growth in revenue and free cash flow, but its top executives elected to bring their performance base bonus calculations more in line with how their underlings are paid — and the Comcast board's compensation committee agreed.

In its proxy, Comcast said its operating management’s “cash bonuses are based primarily on business unit operating metrics rather than consolidated financial performance.”

Chief Financial Officer Michael J. Angelakis last year received a total package of $21.9 million, which was a 4% decline from his 2010 compensation. In contrast, Executive Vice President David L. Cohen accepted more stock and other bonuses which boosted his take 19% to $15.1 million.

Comcast Cable Communications Chief Executive Neil Smit collected $18.5 million in 2011, including a $3-million cash performance bonus. This was the first time that Comcast was required to disclose Smit’s earnings. Smit joined Comcast two years ago but he did not become a top corporate officer until last year when he was named chief executive officer of Comcast Cable.

And Ralph J. Roberts, the 92-year-old co-founder of the cable company, collected his customary $1-a-year salary.

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Top photo: Comcast Chief Executive Brian Roberts in 2007. Credit: George Widman / Associated Press.  Bottom right: NBCUniversal Chief Executive Steve Burke in 2010. Credit: Nati Harnik / Associated Press.

Bloomberg takes another FCC shot at Comcast

Bloomberg LP has filed another complaint with the Federal Communications Commission against Comcast Corp., claiming that the cable giant is thumbing its nose at conditions the government put on it as part of approving its 2011 takeover of NBCUniversal.

At issue is where Bloomberg's business news channel is located on Comcast-owned cable systems in relation to Comcast's own channels CNBC and MSNBC. Bloomberg has claimed that a condition of the merger requires Comcast to move Bloomberg to the same "neighborhood" as its own CNBC and MSNBC channels.

"We need a passport to get to the news neighborhood from where we are now," cracked Greg Babyak, head of government Affairs for Bloomberg LP.

Comcast has countered that the FCC's conditions only apply if Comcast were to start placing similar channels next to each other on the dial, a practice known as "neighborhooding."

In its latest FCC filing, Bloomberg claimed Comcast has done just that. It cited two markets -- Crescent City, Fla., and Claxton, Ga. -- where Comcast created a neighborhood of news channels but left out Bloomberg Television. 

"Comcast is favoring its own programming content and discriminating against competitors," Bloomberg attorneys told the FCC.

A spokeswoman for Comcast denied that the company has created any new news neighborhoods since the NBCUniversal transaction closed last year.

Bloomberg filed its first FCC complaint against Comcast last June, and the length of time it has taken the regulatory to respond is also becoming a sore spot. On a Tuesday conference call hosted by Bloomberg, Gigi Sohn, chief executive of non-profit advocacy group Public Knowledge and a supporter of Bloomberg's cause, ripped the agency for dragging its feet.

Sohn said it is "ridiculous" that the agency has yet to act on Bloomberg's first complaint. "It's time to do the hard work and actually enforce those conditions," she said, adding that the FCC's inaction is going to discourage others from coming forward to report possible abuses by companies such as Comcast.

In a statement, Comcast called Bloomberg's latest complaint "desperate."

"If Comcast is forced to do what Bloomberg wants the FCC to mandate, beyond the requirements of the FCC Order, millions of customers will be subject to disruption and confusion required by massive channel realignments across the country, all to benefit an already thriving, $30-billion media company. It is hard to imagine a more anti-consumer result that would be less in the public interest," Comcast said.

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Could NBC's 'Smash' get a ticket to Broadway?

 

Could "Smash" be headed to Broadway? When NBC developed the prime-time TV musical drama about cutthroat competition on Broadway, the network buttoned up the rights for a Broadway version of the TV show.

The series about the making of a Broadway musical about Marilyn Monroe, which NBC recently renewed for a second season, is a long way from getting to the real Broadway. Still, the show has been a passion project for NBC Entertainment Chairman Bob Greenblatt for years, and it boasts a large cast of executive producers with elite pedigrees and credentials in the theater world.

Steven Spielberg brought the idea for a TV show about a Broadway musical to Greenblatt about three years ago, when Greenblatt was head of entertainment at premium cable channel Showtime. But Showtime's tight budget provided little canvas for Greenblatt to paint an ambitious slate of programming.

"Smash" languished until Greenblatt moved to NBC early last year, where the show got an immediate greenlight. Greenblatt and Spielberg, who has invested in other Broadway shows, recruited producers with musical credits, including Neil Meron and Craig Zadan, part of the producing team behind the film versions of the musicals "Chicago" and "Hairspray."

Tony winners Marc Shaiman and Scott Wittman were brought on board to compose the original songs that are performed on "Smash." The duo retains certain rights to that music -- and that ownership presumably would carry over to any Broadway version of the NBC series. (Shaiman and Wittman also wrote songs for Broadway productions of "Hairspray" and "Catch Me if You Can," in addition to the music for numerous feature films, and have won Grammys.)

By the end of the first season of "Smash," there will be at least 15 original songs written for the fictional musical around which much of the series' action revolves. In the TV show, the fake musical is called "Bombshell." 

But does that mean it's Broadway-bound?

"Since our creative team has been writing songs and snippets of 'Bombshell' scenes only to tell the stories of our characters in 'Smash,' there is no fully realized 'Bombshell,'" Greenblatt wrote Thursday in an email to The Times. 

"I'm not saying that it will never happen, but we are all focused at the moment on completing our [Season 1] finale episode and have already started talking about the macro ideas for Season 2," Greenblatt wrote, adding that next season will feature a second musical, as the fictional "Bombshell" heads to the fictional Broadway.

"So no one has thought twice about trying to find the time or energy to develop 'Bombshell' for the stage," Greenblatt wrote. "It takes several years to write and construct a big Broadway musical, and most of the hard work starts at the script stage before the songs are even conceived."

Greenblatt has long been interested in theater. Several years ago, Greenblatt persuaded his mentor Peter Chernin, former president of News Corp., to release the rights to the 1980 Fox movie, "9 to 5," starring Dolly Parton, Jane Fonda and Lily Tomlin.

From that, Greenblatt, while working at Showtime, produced the show, "9 to 5: The Musical," which opened in Los Angeles in the fall of 2008 and went on to have a five-month run on Broadway in 2009.  (Megan Hilty, who played the Dolly Parton role of Doralee Rhodes in "9 to 5: The Musical," plays one of the prospective Marilyn Monroes on "Smash.")

Now some wonder whether "Smash" could eventually pave the way for a return engagement by Greenblatt on the Great White Way.

"I am working full time at NBC and it wouldn't make sense for me to be a producer," Greenblatt said -- but he added, "Maybe I could produce 'Bombshell' when I'm long gone from NBC, which would be about the time that [a Broadway project] would come to fruition."

NBC, controlled by cable giant Comcast Corp., has a more riding on "Smash" than a potential Broadway play. The ailing network banked heavily on the program to improve its anemic ratings and serve as a beacon for more sophisticated programming. NBC has spent nearly $70 million making and marketing the first season of "Smash."

The show has delivered only modest ratings. Six million viewers tuned in Monday night, although NBC executives have been encouraged that the audience grows by about 2 million people, who record the show and watch it after it airs on TV. 

NBC announced last month that it would bring "Smash" back for a second season. The network noted that "Smash" draws one of the most upscale audiences in network television, coming in behind another musically themed series, Fox's "Glee."

This summer marks the 50th anniversary of the death of Marilyn Monroe, which adds attention to efforts to bring her story to life. (DreamWorks Television and series creator playwright Theresa Rebeck also have an ownership interest in the television version of "Smash.")

And there could be competition if NBC decides to trundle "Smash" to Broadway. Last fall, producer Harvey Weinstein said he was interested in turning his company's Oscar-nominated feature film "My Week With Marilyn" into a Broadway musical featuring Katy Perry. 

It would not be the first time that NBCUniversal dabbled on Broadway. The company has an ownership interest in one of the most successful productions of all time, "Wicked." That musical is produced by former Universal Pictures production executive turned Broadway producer, Marc Platt.

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Top photo: Uma Thurman (center) next week will join the cast of NBC's drama "Smash" for a five-episode story arc. Thurman is pictured with actors Yami Mufdi and Sean Dugan. Credit: Will Hart / NBC  

Bottom photo: NBC Entertainment Chairman Bob Greenblatt in 2009. Credit: Carolyn Cole / Los Angeles Times

Media giants score legal victory against foes of bundling channels

Don't look for your cable company to let you pick what channels you want to get anytime soon.

A panel of judges for the U.S. 9th Circuit Court of Appeals in San Francisco sided with a dozen media giants including News Corp., Time Warner, DirecTV and Comcast in a class-action suit that was looking to do away with the practice of bundling multiple channels together and selling them as a package, a long-standing industry tradition.

Bundling is when programmers sells their channels in bulk to distributors. For example, Walt Disney Co.'s ESPN typically cuts deals with cable and satellite distributors for multiple channels. The distributor then sells the bundle as part of a package to consumers.

Many media watchdogs argue that bundling allows big media companies to get distribution for less popular channels in return for carrying the popular channels. A distributor can pay to carry just ESPN and none of its spinoffs. However, the cost is usually higher than if the distributor agrees to carry several ESPN channels. The consumer who might only want ESPN must pay to get the extra ESPN channels too. 

In affirming a U.S. District Court ruling in California, the 9th Circuit panel said that bundling is not a violation of antitrust laws. The plaintiffs -- a group of cable and satellite television subscribers -- argued that programmers abused their market power and harmed competition by requiring distributors to sell channels in prepackaged tiers rather than on an individual, or a la carte, basis.

The attorney for the plaintiffs, Maxwell Blecher of the Los Angeles law firm Blecher & Collins, said he will either seek a hearing in front of the full 9th Circuit or appeal to the Supreme Court.

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Xbox now used more for online entertainment than online gaming

In a significant milestone for a device once known only for blasting "Halo" opponents, Microsoft's Xbox 360 video game console is now used more for watching movies and TV shows and listening to music online than playing video games online.

Microsoft has long attempted to use the Xbox 360 and its predescessor, the original Xbox, as a "trojan horse" that would use video games as a way to become the digital entertainment hub for families in the living room.

"The original vision for the Xbox was for it to be the heart of connected digital entertainment and it has been amazing to watch the arc," said Otto Berkes, a senior vice president of consumer technology at HBO who helped to launch the Xbox at Microsoft.

Yusuf Mehdi, who heads up marketing and strategy for Microsoft's Xbox business, said households now spend an average of 84 hours a month on the Xbox Live online service playing games, watching videos and listening to music. That's up 30% from a year ago. Just over half that time is spent on videos and music.

By comparison, the average household spend about 150 hours a month watching television.

"What we're seeing is that people are turning on the Xbox to play games and then keeping it on afterwards to get other types of entertainment," Mehdi said. 

Over the past few years, Microsoft has added number of entertainment applications to the 360, including Netflix, ESPN, Hulu, Vudu, and YouTube.

On Tuesday, it is adding new video applications from HBO Go, Major League Baseball and Comcast Corp,'s Xfinity on demand video service.

The additions bring the total number of music, television and movie services available on Xbox Live to 36.

The new applications require that users be paying subscribers to Comcast's cable service, the HBO premium network, or MLB.tv. Those who pay will be able to watch more than 2,400 baseball games or more than 1,000 of HBO programming, including every episode of its original series like "Game of Thrones," "Boardwalk Empire" and "The Wire." Comcast subscribers will have access to thousands of movies and television shows from a variety of channels via Xfinity.

The launch of HBO Go on the Xbox is a big step towards the premium cable network's digital on-demand service becoming a direct alternative to its linear channels. While HBO Go is available on computers and a variety of digital devices like iPads, Xbox 360 owners will be able to watch it on televisions. Previously, the only way to get HBO Go on a TV was via the Roku box, which is far less popular than the Xbox 360.

"The Xbox has an extremely broad user base that can deliver a rich visual experience, which is a pretty big differentiator," said Berkes.

More than 20 million people are paying Xbox Live subscribers who can access the console's entertainment services. A total of 66 million Xbox 360s have been sold worldwide.

Microsoft previously said it would launch HBO Go and Comcast's Xfinity on its console before the end of 2011.

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Screenshot of HBO Go on Xbox Live courtesy of Microsoft.