Thursday, May 5, 2011

There's Money In That Broadband Wire

First Comcast announces a loss of video subscribers with a gain of phone and internet subscribers; today, Cablevision announces the same news. In fact, the gain of phone and internet subscriptions far outpace the loss of its cable subscribers. As a result revenues for both Comcast and Cablevision are up for the first quarter. It is also important to note that profit margins for the video business is far narrower than from phone and internet.

It certainly suggests that owning the pipeline is a smart move, more so to provide interactive connectivity to the home. Cablevision increased its subscriber base through it's acquisition of Bresnan late last year. Comcast, who is already the largest cable operator, may seek to streamline its areas of business to assure more economies of scale. Rumors are floating that Comcast may deal their New York Metro DMA systems to either Cablevision or Time Warner Cable. Comcast is unlikely to be the dominant provider in NY unless it decides on an acquisition strategy. With the spin off of Rainbow still planned by Cablevision, perhaps it allows the Dolan family to put it's systems up for sale as well. Comcast may want to consider that opportunity although it would require another fight with the FCC. If that is the end game, Comcast may just want to retain it's NJ and CT systems.