For years cable subscribers have lamented the “all or nothing” approach to cable packages.  Choosing only the channels you want to watch, and pay for, is out of the question.  But as the economic downturn drags on, and more consumers drop their cable service, Comcast has continued experimenting with “economy packages” consisting of fewer channels at a lower price.

First appearing a year ago in cities like Hartford, the reduced channel lineup works fine for many consumers who don’t watch sports networks or need access to niche networks.

For customers in the Twin Cities of Minneapolis and St. Paul, Comcast’s $29.99 Digital Economy package ($10 more if you do not subscribe to phone or broadband service) offers more than just the local stations in the broadcast basic package, but fewer channels than Comcast’s traditional standard Digital Starter tier, priced at $57.50.

Digital Economy includes all of the local television stations in the area, plus 20 mainstream basic cable channels familiar to any cable subscriber, including A&E, Cartoon Network, CNN, Discovery, Disney, Food Network, Fox News, Hallmark, History, Lifetime, USA and the Weather Channel, among others.

The channel selection trends towards being attractive to older subscribers, but hopes to be attractive to families as well.

It’s “educational, family-oriented channels,” Nick Kozel, Comcast’s vice president of marketing and sales in the Twin Cities told the Minneapolis Star-Tribune.

“This particular customer group typically likes them all, so what we’ve done is tailored what’s available to what a portion of the population really likes,” Kozel said.

The new package will be available in the Twin Cities market starting December 16 and includes one digital receiver and remote control.

Still, Twin Cities residents hope for the day when they can choose exactly the channels they want.

“Price each channel and let us pick the channels we want. These tiers are a joke to stick us with 50 channels we don’t want,” writes Derek.

“Having to buy a “package” is not consumer friendly. We want to choose and pay for only the channels that we watch, not the other 200 that are bundled in,” adds Clint.

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A Comcast subscriber explains the Digital Economy Package (3 minutes)

Like many cable companies, the results for cable television subscriptions continue to be challenged by the downturn in the economy.  So cable operators are increasingly looking to their broadband and “digital phone” divisions to make up the difference in revenue.

Comcast also believes that “pure content” is the place to be, to avoid becoming the owner of “dumb pipes” that simply pass through someone else’s content.  Comcast, the nation’s largest cable operator, is seeking to leverage that content through a reported offer to acquire NBC-Universal.

CNBC explores the likelihood of the deal going through with Tuna Amobi, senior media & entertainment equity analyst with Standard & Poor’s.

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CNBC’s Martin Soong reviews Comcast’s third quarter earnings results and discusses the chances Comcast will pull off its interest in acquiring NBC-Universal.  (11/4/09 – 4 minutes)

Is the Comcast-NBC deal the result of media moguls playing with cable monopoly money?

A few weeks after word broke that Comcast was sniffing around NBC-Universal some on Wall Street are wondering whether a deal is more trouble than its worth.  The deal, valued at $27 billion dollars, would wed the nation’s largest cable operator with NBC-Universal, which owns a broadcast network, a Hollywood studio, and several cable networks.

Bernstein Research, which has favored cable stocks for years, has been the source of considerable unease about the deal.

“Media moguls see it almost as a birthright to buy and sell assets, but most of it clearly has not worked out,” said Craig Moffett, who covers the cable industry for Bernstein. “The value of the deal is the conceptual value of vertical integration, and most of it is against the law as a regulatory matter.”

Moffett’s comment was part of a piece in The New York Times raising questions about whether a Comcast-NBC deal would create more problems than it would solve.

David Carr, writing for the Times, suggests the heady days of media moguls building celebrated giant corporate empires might be behind us, particularly in telecommunications.  Carr, among others, raised memories of the AOL-Time Warner deal, when an upstart pre-dot.com-crash online service  managed to build enough value to buy a content mega-company like Time Warner for $164 billion dollars in 2000.  Just nine years later, AOL has become a forgotten relic, a shadow of its former glory.  Even if the idea of wedding AOL’s online network with Time Warner’s content sounded like a good idea at the time, in the end it just didn’t work out, and Time Warner CEO Jeff Bewkes is devoting plenty of attention spinning AOL away, right down to peeling the letters “AOL” off the front of the building.

Deal proponents suggest Comcast’s cable systems combined with NBC-Universal’s content would give Comcast diversity in its business model, which relies almost entirely on its cable systems.  Opponents say it will preoccupy Comcast with trying to integrate its focused cable-oriented business with a Hollywood studio and a legacy television network and the distractions that come with both.  The deal also comes with a 30% stake in Hulu, which is good and bad according to Carr.  It’s good because it gives the cable operator some control over a video distribution channel that could directly challenge its cable interests.  It’s bad for precisely the same reason, practically begging for regulatory hurdles from a more sensitive-to-antitrust Obama Administration.

Carr suggests if Comcast is in the acquiring mood, it might want to keep its focus on the remarkably stable cable industry in a downturned economy.  One such company, Time Warner Cable, the nation’s second largest cable operator, is a candidate according to Carr, and like Comcast is almost entirely focused on the cable television business.

Of course, such a deal would also certainly attract regulatory attention because of its size and scope.

The reported deal between Comcast, the nation’s largest cable operator and NBC-Universal, part owner of Hulu, could have serious consequences for the Internet’s most popular destination for online television shows and movies.

In just a year, Hulu has enjoyed a quadrupling of visits well into the millions, streaming dozens of network television series, specials, and movies, all supported by commercial advertising.  Devised to help combat online video piracy and earn additional advertising revenue from web watchers, Hulu partners NBC, Fox and Walt Disney Co., have been successful at drawing scores of Americans to the video website.  Program distributors have also been pleased, earning money from shows like Lou Grant that haven’t been on network television in decades.  But after the economic crash of 2008, the venture has proven costly for the partnership, challenged by an advertising marketplace on life support and outright hostility by broadband providers, cable operators, and Wall Street investors, upset that the service is giving it all away for free.

Among the loudest to complain is Comcast, which is now angling to acquire NBC, and its 30% ownership stake in Hulu.

Comcast CEO Brian Roberts has repeatedly complained about the implications of giving away online video, which for some have begun to replace cable television subscriptions.

“If I am any one of these programmers, not just ESPN but the Food Network and I have a business in that 50 percent, 60 percent, 70 percent of my business comes from subscriptions, I want to think long and hard before I just put that content out there for free and not think through what it is going to mean to my business,” Roberts said at an investors conference in May.

Roberts view was shared by the CEO of the nation’s second largest cable operator, Glenn Britt of Time Warner Cable.

“If you give it away for free, you’re going to forego that subscription revenue,” Britt said. “And if you actually think the ad revenue can make up for that, then God bless you and go on your way. But I don’t think that’s the case, and (networks) don’t really think that’s the case either.”

The difference between Comcast and Time Warner Cable is that the former could gain part ownership in the largest service now giving it all away for free, and that has major implications for Hulu’s future.

“Would Comcast put an end to the Hulu model of using the Web to distribute free TV content?” asked Michael Nathanson, senior media analyst at Sanford C. Bernstein & Co. “Will Comcast continue to support Hulu?”

The Los Angeles Times reports there is already a precedent for Hulu limiting content for online viewers in response to complaints:

Hulu already has limited users’ access to certain cable programs, including FX’s “It’s Always Sunny in Philadelphia,” in response to an outcry from the TV producers and cable companies that object to paying TV programmers hundreds of millions of dollars each year for shows that are offered free online.

“Arguably, their ability to shape online content distribution, and to recast windows for video on demand, would be an important attribute of any deal,” wrote Craig Moffett, a cable industry analyst at Sanford C. Bernstein.

Comcast’s interest in NBC Universal would dramatically expand its entertainment portfolio with such attractive cable channels as USA Network, MSNBC and CNBC as well as the Universal Pictures movie studio. The proposed Comcast-NBC Universal venture also would give the cable operator a greater role in deciding how and when TV shows and movies are distributed online and at what price to consumers.

Comcast’s influence would primarily be felt in cable network programming streamed online, as Comcast has a vested interest from the millions it currently pays those programmers to carry their networks on Comcast cable systems nationwide.  Comcast could advocate Hulu become a partner in the TV Everywhere cartel, providing video content only to “authenticated” pay television subscribers, or it could limit the number of episodes available for free, or when those episodes appear on the service.

Soleil Securities media analyst Laura Martin thinks an even more likely possibility would be charging a fee for some of its more popular content.  Martin points to Hulu’s own financial problems, a consequence of the crash in the advertising market.  Soleil estimates that the three partners subsidize $33 million of the losses at Hulu even after earning $123 million this year from advertising.  Even worse, Martin says, is the cannibalizing of the networks’ own advertising earnings from broadcast runs of those shows now available online.  She told the Times that for every viewer who migrates to the Internet, the companies forfeit $920 a year in ad revenue.

But not everyone believes the Comcast-NBC deal is such a great idea.

Time Warner CEO Jeff Bewkes today told an industry conference in Manhattan that large media mergers have had a lousy track record.  Still, he said the merger would probably benefit the cable industry as a whole, because broadcast networks content with giving away content for free online will now be a part of the very industry hurt by that formula and will be more friendly towards arguments to stop it.

“We love to see our competitors taking risks,” Bewkes said.

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CNBC’s Julia Boorstin talked with Hulu CEO Jason Kilar in September about the desire for the company to partner with the cable industry’s TV Everywhere project.

The Wrap last night reported that Comcast, the nation’s largest cable company, was deep in talks to purchase a [potentially controlling interest in NBC-Universal, a report Comcast was disputing as of late last night.

Comcast, the nation’s leading provider of cable, entertainment and communications products and services, is in talks to buy the entertainment giant NBC-Universal from General Electric, according to knowledgeable individuals.

Deal points were hammered out at a meeting among bankers for both sides in New York on Tuesday, executives familiar with the meeting said.

Two individuals informed about the meeting said that a deal had already been completed at a purchase price of $35 billion.

A spokeswoman for NBC-Universal had no comment. Comcast responded with this statement: “While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate.”

Bloomberg News also reported interest by Comcast in a deal with two of NBC-Universal’s owner-partners: GE and Vivendi of France.  But they noted that three unnamed people with knowledge of the deal claimed Comcast would acquire only a 50% stake in the company, not 100% control, contingent on Vivendi selling its 20% stake to Comcast.

If such a deal were concluded, the NBC television network, two cable news channels, The Weather Channel, and Universal Studios would effectively be under the Comcast umbrella.  Comcast, already the nation’s largest cable company, would have a major ownership interest in a large television content-producing family of companies.  Cable companies have recently feared being owners of “dumb pipes” in an increasingly concentrated entertainment marketplace, and a deal with NBC-Universal would allow Comcast to have ownership of a significant amount of the content they distribute over their cable television and broadband networks.

TV Everywhere, a pet project of Comcast and Time Warner, leverages video content from cable networks distributed to “authenticated” cable or pay television subscribers over broadband networks.  Content owners have had the liberty to govern the terms and conditions of the distribution of their content within the scope of the project.  Outright ownership or control of the content by cable companies provides a much more predictable outcome.

Who foots the bill for an estimated $35 billion dollar investment in a completed deal for NBC-Universal?  Comcast customers, of course.