The Comcast/NBCU merger is both less than it seems and more than it seems. First, the less part: Comcast is acquiring 51per cent of GE's NBCU assets and will pay for the rest over time through the significant cash flow that large cable operators historically have generated. Comcast agreed to pay GE $6.5 billion in cash and contribute businesses valued at $7.25 billion, including E!, Versus and the Golf Channel, its 10 regional sports networks and digital media properties. While $6.5 billion in cash is not insignificant, the amount must be considered in the context of the company's revenues, which totaled $29 billion in 2008. And some portion of the yearly payments to be made by Comcast for the acquisition will reflect licensing fees it would have made to NBCU for its cable and broadcast properties anyway.

Surprisingly, the deal may also turn out to be less than it seems as a landmark instance of vertical integration - the aspect of the deal that's gotten the most attention. True, it represents the largest video distributor acquiring marquee programming businesses, including the top rated U.S. cable network, USA Network, a host of lesser ranked NBC networks like The Weather Channel and CNBC, and the (currently fourth-rated) broadcast network, NBC, with its storied past. It also will acquire GEowned stations that have affiliations with NBC and Telemundo, the leading Spanish language broadcast network. For Comcast shareholders, the acquisition of these assets more likely serves as a hedge against a future in which Internet-delivered video, rather than cable-operated-provided bundles, will represent the way programming is consumed.

It is far from clear that vertical integration and the potential for exclusive programming for Comcast (as opposed to a hedging- your-bets strategy) is of overriding importance. For one thing, the deal was announced just as Time Warner, with HBO, CNN, and other cable networks, broke off from Time Warner Cable, the number 2 cable company in the U.S. Leaders of the two largest U.S. cable industry players have taken nearly opposite business strategies going forward. Either one of the two companies is very wrong about vertical integration or, more likely, vertical integration is a description, not a goal, of the deal.

And Comcast has taken steps to show that its vertical integration is less than it could be. For instance, Comcast is acquiring valuable broadcast stations affiliated with NBC and Telemundo. The law would possibly permit Comcast to offer its video competitors in a market (like satellite and telephone companies) unattractive deals for rights to carry these stations. A broadcaster can simply deny the programming to the cable operator and there is no FCC procedure to get at it. Indeed, such hard negotiations occurred in the last six months between broadcaster ABC Disney and Cablevision, an operator in New York.

To win approval of the deal Comcast volunteered to subject negotiations over those rights to the same "program access" rules that apply to the cable networks it now owns and will own. That means that cable operators and DBS providers can take their retransmission consent dispute to the FCC and have the terms of carriage decided quickly. Thus, Comcast has conceded it will make programming it owns available to its satellite and telephone company competitors, subject to standards for these competitors more generous than currently required by law in some cases.

The declining significance of vertical integration has been a trend at least since 1992, when Congress first imposed program access on program networks owned by cable operators. In fact, few networks have any interest in being "cableonly" or "DBS-only" today because of the importance of getting as many viewers to watch in order to maximize the value of advertising on the networks.

And Comcast has made other promises, including adding more independently owned networks to its cable operator line-up and preserving and enhancing NBC station news offerings. Indeed, other than sports - regionally or nationally - program exclusivity just isn't that important to insuring vigorous competition in the video marketplace and it doesn't exist much. So vertical integration is less than it seems here.

But if there's a "more than it seems", it's hard to know how to define it. That's because if the future of video is the internet, well, the future is in the future. Today, online viewing never shows up as a significant part of video consumption. This is in part why Comcast made no promises about how it will conduct its nascent online businesses. NBC is part of Hulu, a free video portal carrying top broadcast shows on the internet. Comcast has launch Xfinity, its Hulu-like website, with broadcast content and cable content available for customers who subscribe to Comcast cable service.

This latter subscriber-only model is part of "TV Everywhere," a programmer-distributor effort to avoid what happened to the music industry on the internet. The goal is to let viewers who have paid a subscription watch content online instead of on demand or in real time on cable. Some public interest critics, who've asked the Department of Justice to investigate, say that TV Everywhere stifles the online market by requiring viewers to pay for a cable subscription in order to view a cable network's programming.

While critics may accurately describe the result of "TV Everywhere," it's likely that it's the market that is determining this result. Programmers who believe they can make more money offering online availability outside of TV Everywhere can and do proceed to do so. And as the cable industry found out, studios don't always do their bidding on making content available. For years (and for most studios today as well), cable on-demand services get feature films only weeks after the films are released to retail in DVD. This may change because of the declining public appetite for DVDs and the growth of on-demand platforms.

While it's hard to estimate, the annual price tag for the creation of U.S. video is about $150 billion. Half of that comes from license fees paid by cable operators, satellite, and telcos and collected from subscribers through sales of bundled program packages. The other half, roughly, comes from advertising. That's a huge economic model to replicate on the internet, where the bulk of revenues come from search, not subscriptions or even advertising.

While regulators looking at this deal will want to be forward looking, it will enormously challenge them to define the "problem" that the Comcast/NBCU merger poses to online distribution, given how small a slice of video viewing takes place there and Comcast'-NBCU's tiny share of online revenues. Even if critics successfully identify a problem, fashioning a remedy will be even harder. This latter challenge requires a way to replace lost sources of revenue if the remedy involves taking away some part of the existing revenue structure.