Monday, October 3, 2011

Consolidation In Cable To Compete Better

Strike the word local from the cable dictionary. In order to compete against telco and satellite services, the buzzword is consolidation. Comcast reorganized to three regions, Time Warner to two, East and West, and today it is Cox's turn. They first reduced from 11 to 9 and now are combining again into 7 operating divisions. Mark my words, by next year it will be under 5. As businesses mature, it is not necessarily a bad thing. Decisions rise up higher into the organization and local management goes away. What is left is service departments and a few customer service reps.

But in the face of competition, cable once argued that local was better. Where the telco and the satellite providers were national in scope, only cable cared about each community. Perhaps that strategy has proven less profitable as cable is now copying their competitors' national strategic management approach. But it also means less management jobs, and in today's economy, not helpful. Less costs for Cox and others, more operating profit.

But does this national approach spur more cable subscription? Can local help to better push cable over competition? It seems the approach is only about technological updates, more apps, mobile viewing, more on demand choice. Still, the missing piece may still be localism and should cable try to recapture this lost world, it might be a good differentiation move. Till then, stay tuned for more consolidation of cable operations.

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