Saturday, June 18, 2011

Cable Networks For Sale?

Rainbow Networks, a Cablevision company, plans to spin off at the end of the month and rebrand itself as AMC Networks. E.W. Scripps successfully spun off its cable programming arm, Scripps Interactive (SNI) with HGTV and Food Network, a few years ago. And the talk now centers on SNI potentially selling itself to another programmer. "SNI has long been eyed by a slew of big media conglomerates eager to bulk up their cable holdings. Disney Co., Time Warner, Viacom and even pure play Discovery Communications have been suggested as possible partners." As the cable industry matures, consolidation is necessary on both sides of the arena, for operator and programmer alike.

The merging of programming companies enables better economies of scale, cost and productivity efficiencies, and of course, more leverage in negotiation carriage and programming agreements. Certainly Rainbow saw that when they acquired Sundance Channel a couple years ago. And NBC has been picking up channels in its long run, including USA, Oxygen, and Bravo. With cable operators merging and consolidating operations, so too must programming networks in order to compete effectively in a changing marketplace. Will Scripps sell to a bigger programming company, will Rainbow? The long term bet is very likely.