Tuesday, May 26, 2015

A Cable Oligopoly Is Forming

Time Warner Cable (TWC) wasn't an orphan for long.  Despite a too long engagement that was broken up between Comcast and TWC, a new suitor named Charter Communication, ultimately won their hearts.  And along with the acquisition of Bright House Networks, Charter will become the second largest cable operator in the nation.  Add a combined AT&T-DirecTv as the third major cable operator in the nation and you have your clear oligopoly.  Once swallowed up and absorbed, the only question will be how long before the rest of the cable operators get bought up. 

Can Cablevision really continue to operate as a stand alone operator?  Will they be plucked up next by Comcast or Charter in the next year or so?  Can Cox Communication remain private and will smaller cable operators seek out buy outs?  It seems that once Time Warner Cable was spun off from Time Warner, Inc., it's heart was no longer in the business of running a cable operation.  It is just not as sexy as owning content companies like Turner and HBO.  But did they ever consider what they could do if they were the one acquiring cable systems like Charter or even Cablevision?  I'm not sure.

It seems that the FCC will be okay with a Charter acquisition of Time Warner Cable as well as AT&T buying DirecTv.  It creates two mega entities large enough to compete with Comcast.  And while AT&T lacks the broadband size, their cellular business more than makes up for it.  Approvals seem a near certainty.

So what is next?  Beside Cablevision or Cox or another cable operator getting bought, I expect it is time for some mergers of content companies too.  Could it be Scripps or AMC or Disney or Discovery in the mix?  With less cable operators, networks need more leverage as well to get their higher prices.  Stay tuned.