Comcast (NASDAQ:CMCSA) spent a lot of years as a monopoly provider of cable and Internet services. In some markets, it even retains that status for one or both products.
Holding a monopoly made the company a lot of money. Unfortunately (at least for Comcast), that status has slowly eroded as the phone companies began offering broadband Internet and pay television, while the satellite companies encroached on the cable business.
The rise of pure digital television services including DISH Networks' (NASDAQ:DISH) Sling TV may be the final blow. Sling starts at $20 a month, and it offers subscribers around 20 popular cable networks, including ESPN. The company also offers add-on packs for enhanced sports, news, and family offerings, as well as the ability to add HBO.
It's a disruptive product that helps people cut the cord with cable. Sling is the first service that brings customers live-streaming cable without, well, cable.
The product represents a direct threat to the pay television part of Comcast's business model, and the company is not taking the threat lightly. The pay-TV operator has blocked ads for Sling TV from running on its owned and operated NBC affiliates, according to a blog post from Sling CEO Roger Lynch.
What Sling is charging
Lynch wrote that Comcast, which owns NBC and some of its affiliates, has rejected the Sling ads in at O&O stations in San Diego, San Francisco, and Washington, D.C. The CEO noted that the ads are running across the other major broadcast networks and on NBC stations not owned by Comcast.
His blog post suggests that Comcast's move is anti-consumer and that it shows how the company is out of touch:
Here's the irony. The refusal to air our campaign endorses the ads' central truth: there are traditional pay-TV players that just don't get it.
And what is it that they don't get?
Innovation benefits customers. Sling TV exists because we recognize the need for a new live TV model that's simple. Many of us are tired of long-term contracts, expensive programming bundles, high prices and poor customer service. Instead, we want TV on our terms. To come and go as we like. To watch great content, including sports, on the devices we own and use. And perhaps most importantly, we want rational pricing.
Lynch has a point, and Comcast not taking the ad actually seems to do more for Sling than had it actually aired them. He also has a clear belief that Comcast wants to not just stifle competitors, but also shut down innovation:
Comcast has a demonstrated history of shutting down ideas it doesn't like or understand, predictably to its benefit and at the expense of consumers. This is why we aggressively fought Comcast's merger with Time Warner Cable. Our argument? That this massive conglomerate would use its incredible market power in broadband to thwart live Internet video services like Sling TV. Comcast was denied this avenue. Unfortunately, it appears "Old TV" may grasp at any tactic in attempt to preserve the status quo.
It's all rhetoric and bluster, but Comcast has played right into Lynch's hands. Refusing the ads looks petty and small-minded, and it's not likely to keep any disgruntled customers from cutting the cord.
NBC confirmed the decision to not accept the ads on its owned and operated stations to Business Insider, but it offered no further explanation.
Comcast has made a mistake
Sling has decided to use a tried and true tactic to up its own profile: call out the biggest player in the space and issue a challenge. That's how Clubber Lang landed his fight with Rock Balboa in Rocky III, and it's how Howard Stern worked his way to the top back when he worked as a syndicated radio host.
In these cases, the bigger player simply has to stay out of the fray and not give the challenger credibility until it actually deserves it. By responding in this petty fashion, Comcast is not only guilty of being "old TV," but it seems like a company still living in a world where consumers do not have choice. Essentially, the cable giant responded to the commercials that call it a bully by behaving like one.
That's not going to help it in the court of public opinion, and it may even sway more customers to give Sling a chance.
Daniel Kline has no position in any stocks mentioned. He has a media account for Sling TV but he is also a paying cable customer. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.