Comcast: The Quest for Global Dominance

Morgan LloydDawn Parra Peggy McGill Queens University

As the mergers and acquisitions of media companies continue at lightning speed, creating and expanding several Transnational Corporations, Perhaps the most fascinating issue is that no one

government, education institution or corporation owns the entire internet and can therefor control it. As we move into the unknown territory regarding the creation and growth of Transnational

Corporations, there is a question that must be asked of this vast amalgamation called the World Wide Web, “Who controls the internet? The question itself is startling and there is no concrete answer.

However there are multiple avenues through access to the internet and its content can be affected. Traditionally there has been a balance of control over the internet by both market and regulatory forces that engendered high levels of innovation and profit.” (Holofcener, 2012, p. 403) In February of 2013, Comcast Corporation announced its intention to purchase Time Warner Cable. This has caused much

consternation within the media industry with concerns of a new monopoly being created and the fear that Comcast will be the one controlling the internet. However if we look at the current state of

Comcast Corporation and how its organizational structure is related to its performance outcomes, we get a preview of what Comcast would be like as an even larger Transnational Corporation who controls

an unprecedented amount of the internet.

Structural contingency theory examines the current state of constraints on a particular media organization to present a structure that will optimize its production and growth. The relationship

between organizational structure and performance outcomes varies depending on the organization under review, and contingency theories offer a framework that targets the preexisting constraints within an organization. According to Deuze (2011), structural contingency theory is “grounded in assumptions of economic rationality” (Dueze, 2011, p. 16). Under these assumptions, the theory

proposes that organizations select or endorse organizational frameworks that will increase the performance of the company in relationship to its financial growth and functionality of its daily

operations.

Introduction

Thesis

In the past, Structural Contingency theory has primarily been applied to the newspaper industry. Organizations have not applied or fully optimized structural contingency theory. However, the foreseeable changes in media ownership reveal a need for this type of research. The growth and changes associated with media ownership “grow increasingly complex through media consolidation and as variances in performance across seemingly similar media corporations become more evident. (Deuze, 2011, p.16). Using Structural Contingency Theory to provide a framework that analyzes the current constraints of Comcast in order to increase the organization's global market, The researchers therefor posit that the way in which Comcast chooses to compete globally is through mergers and acquisitions of its opponents, allowing it to operate a global network that connects to every part of the internet.

Literature ReviewCakir (2012) presents the first use of contingency theory as applied to international organizations. In his article, Cakir outlines the four areas in which contingencies exist. According to Cakir, “The contingencies usually related to structure of the organization are environment, organizational size, strategy, and technology” (Cakir, 2012, p.8). Based on Cakir’s findings, contingency theory models were designed to “analyze entities that bear organizational characteristics in international relations” (Cakir, 2012, p.19). With that said, structural contingency theory will aid in analyzing the possible contingencies that will arrive as Comcast ventures into the global market. However, structural contingency theory was developed with smaller organizations in mind, so the amount of research applying the theory to larger corporations is scarce.

Contingency theory has been successfully applied in a variety of contexts. In order to advocate its relevance in regard to Comcast’s global ventures, other research must be examined. Scholars, Di Salvo and Larsen (1987) and Bae and Park (2011) have published research regarding the importance of communication within an organization and how the contingencies can offer insight into the flow of an organization. Di Salvo and Larsen use the contingencies of an organization to examine their influence on communication throughout company hierarchy. According to Di Salvo and Larsen, “Contradictions may be due to varying communication skill importance because of one’s position in the organization” (Bae & Park, 1987, p.4). While their findings indicate the need for companies to examine internal communication, they do not address the implications on external communication as indicated by job title.

Bae and Park apply the contingency theory of conflict management to public opinion and how consumers respond when corporations engage conflict management. Bae and Park’s research focuses on customer responses to Samsung’s use of philanthropy as a means of conflict resolution. According to Bae and Park, “Contradictions may be due to varying communication skill importance because of one’s position in the organization” (Bae & Park, 2011, p.146). The scope of their research is aligned with socio-contextual influences that affect public opinion. Bae and Park provide adequate evidence that strategies must be utilized that do not change the company’s stance in order to avoid providing conflicting messages to customers. The contingencies addressed by Di Salvo and Larsen (1987) and Bae and Park (2011) revolve around communication, which is vital for a successful vertical integration by any company. However, Comcast’s need for involvement in the global market issues a gap in research since the research did not offer suggestions for the socio-contextual influences of the global audience. Furthermore, there is a need for research regarding the possible contingencies that arise during the process of globalization.

Literature ReviewOther scholars have used contingency theory to examine behavior. Holm, Kumar, and Rohde (2011) applied the contingency theory to examine customer profitability against the complications that arise in the work place. With marketing as the founding element, Holm, Kumar, and Rhode’s goal was to further analyze the Customer Lifetime Value (CLV) and Customer Profitability Analysis (CPA) to answer the question as to when these models should be implemented to generate the most success. Their research was centered on providing employment strategies for these current models in order to generate customer profitability. Contingency theory proved helpful in their research by aiding in the categorizing of customer behavior and complexities. These categorizations revealed the contingencies that occur in the workplace that require action from employees, thus proving the need for this research. Holm, Kumar, and Rhode were able to find a gap in research by noting that, “Although both CPA and CLV models can be useful for resource allocation purposes, the respective models will not be equally useful to deploy in different customer settings” (Holm, Kumar & Rohde, 2011, p. 393). Their findings concluded that employers should work for a balance between CLV and CPA in order to measure customer profitability since the complexities of any company’s clientele base is complex. Ramaswami’s (1996) research proposes traditional and contingency theory as a means to further explore negative employee responses under the scope of marketing corporations. Unlike Holm, Kumar, and Rohde (2012), Ramaswami (1996) focuses on employee behavior under the assumptions of contingency theory and allocates their behavior by the context of their job description. Both studies present a need for further research on the behavior of external stakeholders and the effect it has on profitability.

Cadeaux and Ng (2012) acknowledge technological changes and globalization as generating much of the uncertainties involved in vertical alignment, which supports structural contingency theory as a means to analyze Comcast’s future in the market. Cadeaux and Ng provide accessible research toward the effect of structural contingency theory on vertical alignment. Their research does regard the global market; in fact, their findings support the uncertainties involved when a company is integrating into the global market and provide a meta-analysis of the literature available regarding strategies currently used in vertical integration. Cadeaux and Ng recognize the negative effects of environmental uncertainties on vertical integration and argue “that environmental uncertainty should favour less integrated vertical structures; that is, structures that lack strong hierarchies, central authority or formalization of rules and procedures” (Cadeaux & Ng, 2012, p.7). Additionally, strategies for predicting the uncertainties will be based on the individual company. Due to its broad range of focus and the complexity of different organizations, Cadeaux and Ng were unable to address exactly how to predict the level of uncertainty per organization. However, their research did favor structural contingency theory as the more adequate indicator.

The literature presents the need for more research on corporations who are contemplating or in the process of vertical integration through the lens of structural contingency theory. Structural contingency theory was originally intended for the examination of international relationship. Scholars such as Cadeaux and Ng (2012); offer findings that incorporate the effects of technology and globalization on vertical alignment. The literature presented supports structural contingency theory as an appropriate fit for analyzing Comcast while allowing for gaps in research to be answered.

Net Neutrality

“Net neutrality posits that individuals who pay similar rates to an ISP for access to the internet should have similar access to all legal content and

that content should travel over the network at the same rate.” (Holofcener, 2012, p. 404) much the same way as the internet built itself

by communication between users and the sharing of ideas, Comcast must follow the same principal if they wish to become an elite level TNC and be

known as a force to be reckoned with at the international level. Since “The internet was founded and developed on the principles of net

neutrality.” (Holofcener, 2012, p. 405) Comcast must follow the principles of net neutrality that “it must remain neutral in the allotment of the internet access because the internet’s future creators will need that

access to keep the internet growing.”(Holofcener, 2012, p. 404) Although Comcast is a for profit corporation it would do itself a tremendous

disservice to restrict any type of content due to pricing. The open ideas that flow through the internet should reflect in the open service that

Comcast offer to its customers. Profit should never interfere with freedom of information and if Comcast wishes to achieve the elitist level of a

Global international corporation, it must remember this.

Comcast

Background

Comcast

Background

The ULU Local 100, with the help of some post ACORN organizations, has led efforts to ask the FCC to force Comcast to live up

to their agreement. Unfortunately, this has been a mostly uphill fight, but it’s

given community organizers worldwide a clear goal. “Internet needs to be treated

as a utility that can be accessed by all citizens in order for a civic society to

function properly, and denying the right of internet access to low-income people

based on lack of regulatory control is something that we can fight against, and quite possibly win.” (Anderson, 2014, pp

56-57).

Across the border in Canada, 43% of the poor don’t have the internet, and

research finds the main reason for this is extravagantly priced services from

the main three Internet Service Providers. ACORN Canada’s second

convention started to address this gap by writing letters to the three main Canadian ISP’s, to meet with Acorn.

Only the Rogers ISP responded, and by the end of the summer, they launched their Connected for Success service for

public housing tenants in Toronto.

This wasn’t successful at connecting the poor to the internet, but it did get Rogers to see that the time for government to see the internet as a utility may be coming soon. In Vancouver, ACORN has finally had meetings with a second ISP, TELUS, to provide a more robust service, but they claim they need a partner in this to verify the incomes of the poor. Also the Canadian version of the FCC,

the CRTC, responded to ACORN only by letter with their desire for open market free of any type of price controls, but did state

they’d plan a formal review of internet pricing in 2014. They can count on ACORN

being present at that review.

Comcast Between Mergers

and Acquisitio

ns

The demand for higher revenue essentially decreases the quality of the content being produced. This research has reported a connection between organizational values and content, but the factors that influence this

effect vary and would likely differ for other media outlets. Primarily, research has been devoted to the effect of media content on organizational fixtures relating to newspaper content; therefore, structural

contingency theory would provide a modernized frame and perspective to transnational media corporation, Comcast. Comcast has been criticized for a number of reasons, for example its customer satisfaction often ranks among the lowest in the cable industry, and in addition, it has violated net neutrality practices in the

past. Comcast’s critics are many and they advocate for a distinction between its private network services and the rest of the Internet. Critics also point out a lack of competition in the vast majority of its service areas. Yet,

even with this imposed necessity requisite to concentrate on improving service, Comcast instead focuses its energies on extending the reach and audience of their corporation in order to compete in the global market.

It can be seen that structural contingency theory is an ideal framework to utilize, when examining the activities of a global media corporation such as Comcast.

Comcast competes on a global and national scale, a forum that allows corporations to invest in research, development and new technology. The leaders of Comcast

propose that the only method they can continue to expand and compete is through merging and/or acquiring their opposition. They see their competitors as

being the likes of Netflix, Google, and even Apple. And the reasoning behind this is that their goals are to succeed in the national and global broadband industry.

The future of entertainment is online, and companies that supply the fastest connections have the most power over the bulk of industries that want to get their Web content and

services to consumers. Comcast will have 40 percent of the broadband Internet market if the merger with Time Warner is approved. Hence the impetus to pursue the lofty goal that Comcast ensues through the merger with Time Warner. On the other hand, the possible merger between two of the nation’s biggest cable companies, Comcast and Time Warner

Cable, would result in a combined group that would be the dominant provider of television channels and Internet connections. A deal such as this invokes images of powerful media

conglomerates controlling everything we see on TV and access on the Internet.

Conclusion

REFERENCESAnderson, J. (2014). Fighting to Bridge the Digital Divide. Social Policy, 44(1), 56.

Bae, J., & Park, S. (2011). Socio-contextual influences on the korean news media's interpretation of samsung's $847.6 million donation. 141-166. Journal Of Public Relations Research, 23(2). doi:10.1080/1062726X.2010.504794

Brunning, D. (2014). At the only edge that means anything / How we understand what we do. 89. Against The Grain, 26(2).

Cadeaux, Jack, and Adrian Ng. (2012) "Environmental uncertainty and forward integration in marketing: theory and meta-analysis." 5-30. European Journal of Marketing46.1/2. EBSCO Host. Web. 6 Sept. 2014.

Cakir, Armağan Emre. (2012) "Applying contingency theory to international organizations: the case of european integration." 7-24. Journal of International Organizations Studies 3.1 Journal of International Organizations Studies. Web. 6 Sept. 2014.

Chavez, C. A. (2013). Building a “new latino” in the post-network era: mun2 and the reconfiguration of the U.S. latino audience. International Journal Of Communication (19328036), 71026-1045.

Comcast Corporation SWOT Analysis. (2014). Comcast Corporation SWOT Analysis, 1-11.

Deuze, M. (Ed.) (2011). Managing media work. 13-30. Los Angeles: Sage.

Di Salvo, V. S., & Larsen, J. K. (1987). A contingency approach to communication skill importance: the impact of occupation, direction, and position. 3-22. Journal Of Business Communication, 24(3).

Holm, M., Kumar, V. V., & Rohde, C. (2012). Measuring customer profitability in complex environments: an interdisciplinary contingency framework. 387-401. Journal Of The Academy Of Marketing Science, 40(3). doi:10.1007/s11747-011-0263-4

Holofcener, A. (2012). Net Neutrality Besieged by Comcast Corp. v. FCC: The

Past, Present and Future Plight of an Open Internet. Journal Of Business & Technology Law, 7(2), 403-424.

Hovav, A., & Popovicui, C. (2009). Adoption leadership and early planners: comcast's IP upgrade strategy. 143-146. Communications Of The ACM, 52(7),

Ramaswami, S. N. (1996). Marketing Controls and Dysfunctional Employee Behaviors: A Test of Traditional and Contingency Theory Postulates. 105-120. Journal Of Marketing, 60(2).

Comcast: The Quest for Global Dominance

Morgan LloydPeggy McGillDawn Parra Queens University