Comcast's planned acquisition of Time Warner Cable for $45.2 billion in stock will shake up the TV landscape, intensify the conversation around carriage disputes with TV networks and potentially incite yet more media consolidation.
It will also, of course, be scrutinized by the Federal Communications Commission. The merged company would command nearly 75% of the cable TV market and about 30% of the broader multichannel video market -- a space that also includes DirectTV, Dish Network, AT&T and Verizon.
Assuming the deal is approved, however, it will make Comcast becomes a more important partner for advertisers, said Ken Doctor, affiliate analyst, Outsell. Its expanded role as both a content producer and content distributor will make it all the more competitive for ad dollars with companies like Yahoo, AOL, Google and Facebook. "It will become more of an ad competitor as selling of TV [and] digital inventory blurs," he said.
Here's how the effects for marketers could play out.
Alternative national buys
"Advertising in the operator world has been an afterthought," said Tim Hanlon, founder and CEO of consultancy The Vertere Group. "[Advertising's] revenue contribution has been a drop in the bucket compared with subscriber revenues."
A merged Comcast reaching 30 million U.S. households, along with the national reach of DirecTV and Dish Network, creates an alternative to buying national advertising from the TV networks, said Jason Kanefsky, exec VP-strategic investments, Havas Media.
"The addition of hundreds of thousands of ratings points into the national market should create a cost-efficiency opportunity in the years to come," Mr. Kanefsky said.
Acceleration of addressable advertising
One of the biggest obstacles to ad targeting at the household level has been a lack of broad reach, which makes running campaigns across multiple operators a clumsy and inefficient effort. The merger should eventually help expand the addressable universe to the kind of scale that advertisers desire and speed up advances in areas such as dynamic ad insertion.
And increasingly, Comcast will have the data to make addressable smarter. With about 30 million set-top boxes, it will have an even bigger trove of ratings information, viewing habits and personal data. Combined with marketers' own data, that will help planners and buyers laser focus their media selections, Mr. Kanefsky said.
$43.6B U.S. agency revenue
Advertising as chip in carriage agreements
As Comcast becomes a bigger ad juggernaut, Mr. Hanlon predicts a future in which advertising plays a larger role in network-operator carriage agreements.
Currently, pay-TV operators such as Comcast control about two minutes of spot commercial time per hour and the programmer retains the rest. Mr. Hanlon predicts an approach in which programmers let pay-TV distributors sell some their own national inventory on an addressable basis and share the revenue.
Throwing advertising into carriage negotiations could help offset increasing programming costs by subsidizing the hefty increases that networks increasingly demand.
A deal NBC Universal struck earlier this year with parent Comcast points to such a future. NBC Universal will sell some of the ad inventory it controls for addressable campaigns. As part of the deal, marketers can target ads in NBC Universal's video-on- demand content by household.
A stronger political-advertising play
Aside from general marketers, this may be especially attractive to big-spending -- and increasingly data-driven -- political marketers. And it will give Comcast more inventory to sell in hot political-ad states like Ohio, North Carolina and Wisconsin.
The ability to better-target voters allowed cable operators to get a bigger chunk of political ad spending in the 2012 Presidential Election.
Ramped up video-on-demand
For a decade Comcast has been at the forefront of video-on-demand and Time Warner Cable will expand its presence into two major markets, Los Angeles and New York, said John Collins, managing director-broadcast and iTV, Media Storm. "On-demand will become some of the most valuable inventory in the ecosystem," he said.