CBS, Disney, Fox, and Time Warner are the easy answers — and the ones that many financial types believe are eyeing the independent programming network companies following Comcast’s $45.2B agreement to buy Time Warner Cable. But Bernstein Research’s Todd Juenger takes the conversation a step further today with an intriguing report that suggests several less obvious potential buyers for AMC Networks, Scripps or Starz. Distributors including DirecTV, Dish Network, Charter, AT&T and Verizon might want to take a page from Comcast’s playbook when it bought NBCUniversal. DirecTV doesn’t offer broadband, so it has “additional motivation to take some action to future-proof the business,” possibly by offering exclusive access to certain networks, Juenger says. Charter and Dish are long shots: Charter probably could only afford AMC. And Dish Chairman Charlie Ergen seems intent on acquiring airwave spectrum, although “nobody really knows Mr. Ergen’s potential plans, and they could change.” AT&T and Verizon’s corporate cultures are “a step (or three) further removed from the content business.” Yet here, too, they might take a leap since “their historical core businesses are not exactly growing, and they could amass the financial resources.”
Related: What A Comcast-TWC Could Mean For Hollywood
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The No. 2 cable company is seeing the “best subscriber performance in the residential side that we’ve had in a 5 year period,” with total relationships up by 75,000 in the first two months of this year, CFO Artie Minson told the Morgan Stanley Technology, Media & Telecom Conference today. But all of the increases are in broadband, phone and business services: Residential video subscriptions are down by about 50,000 so far. The company lost 217,000 in the last three months of 2013 to end the year with 11.4M. Still, the exec says there’s a silver lining with net additions over the last four weeks. “As we head into March we’re excited about the positive momentum.” Minson warned that the current quarter may be “the low point of the year” for revenue growth in comparison with the same periods in 2013. While the company works to promote its $45.2B sale to Comcast, Time Warner Cable is going “full steam ahead on all of [its product enhancement] initiatives.” TWC hopes to win back market share by hitting customers with “more modest rate increases” after a period when “we were getting too much of the revenue growth from the rate side.” Minson says he’s not concerned about the growing talk about an online pay TV service, possibly including one from Dish Network with programming rights it just secured from Disney. “I’m not sure it is a business unless … Read More »
Fox‘s Deputy COO particularly likes the fact that Dish Network agreed to disable the ad-zapping function in its Hopper DVRs for the first three days after it records an ABC show. “Protecting certain windows is important” — especially the three-day period that’s most important for TV ad sales — James Murdoch told the Morgan Stanley Technology, Media & Telecom Conference today. As part of the deal Disney dropped out of the suit that Fox and other broadcasters filed against Dish, which charged that its DVR’s capability to automatically skip past ads in recordings of their shows infringed on copyrights and violated contracts. Murdoch shied from discussing Disney’s changes in depth, but said that “overall it looks like it’s a positive step forward. But it’s a step.” He also left a lot of wiggle room in his response to a question about Comcast’s $45.2B agreement to buy Time Warner Cable. “You can clearly see the rationale…But this one we have to watch very closely.” He suspects “there’ll be more to come” as regulators and others investigate how much clout Comcast would have over broadband access and pricing. Read More »
The companies finally put a date on the agreement made in December for the No. 2 cable operator to offer the premium service which has been struggling to expand its distribution. Time Warner Cable will help to generate some buzz by offering its digital video customers a three-month free trial of Epix, Epix 2, Epix 3, and Epix Drive-in. Epix will be available in standard and high definition, while Epix Drive-In will be only in SD. In addition to the linear channels, TWC will offer Epix programming on VOD and will stream content to the service’s app. “This is yet another way of showing that we appreciate our customers’ loyalty and are consistently working hard to provide even more value to their service,” says TWC’s Jeffrey Hirsch. The cable company is eager to slow, and possibly reverse, the decline in its video subscriptions. Meanwhile Epix — owned by Viacom, Lionsgate and MGM — sees the deal as an opportunity to build momentum for additional deals, possibly including with Comcast, which plans to buy TWC, and DirecTV. Read More »
You can bet that government officials and opponents of Comcast’s $45.2B planned acquisition of Time Warner Cable will scrutinize its just-released third annual report describing how it has fulfilled the promises it made in 2011 to win FCC approval for the deal to buy NBCUniversal. Opponents already say the cable giant can’t be trusted. ”To the extent that Comcast has a history of breaching its legal obligations to consumers, such history should be taken into account when evaluating Comcast’s proposal for future market expansion,” Sen. Al Franken (D-Minn.) said last week in a letter to FCC Chairman Tom Wheeler. But Comcast says the new 90-page report shows that it has “continued to meet and in many cases exceed our obligations.” For example, it says that its Internet Essentials program has provided home broadband service to more than 250,000 low income families, and has exceeded by 64 the requirement to provide courtesy video and broadband to an additional 600 schools, libraries and community institutions in underserved areas. (The company says that tomorrow it will “make an important announcement about the future of the [Internet Essentials] program.”) For online video Comcast says it has “new or renewed agreements with Amazon and Netflix, among others” resulting in a third year in which it has made these deals to provide programming to potentially competitive services without having to go to arbitration.
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The cable giant has said that, if it buys Time Warner Cable, it will jettison systems with 3M subs to bring its market share below 30% — once a federally mandated cap. But instead of selling the franchises to another cable company, Comcast is considering the possibility of spinning them off as a new publicly traded company, Bloomberg reports citing “people with knowledge of the matter.” If it did so, the new entity would be the No. 4 cable operator after Comcast (with TWC), Cox, and Charter. Regulators might like the idea, the story says, because it “would create a new competitor.” That would seem to fly in the face of Comcast’s claim that its $45.2B acquisition of TWC wouldn’t reduce competition because cable companies don’t compete with one another. The conventional wisdom holds that Comcast would unload systems in rural areas that tend to be more vulnerable to competition from satellite services, and that would be poor prospects for sales of ads and business services — two of cable’s fastest-growing initiatives. This morning Liberty Media CEO Greg Maffei, whose company is the No. 1 shareholder in Charter, said that execs are still interested in finding acquisition targets, possibly including ones that Comcast is ready to cut loose.
Related: Time Warner Cable Warns Investors About Comcast Deal Risks
John Malone’s company is the largest shareholder in Charter Communications whose hostile bid for Time Warner Cable was trumped when Comcast stepped in with its $45.2B stock offer. But while Liberty recognizes that the No. 1 cable company has the upper hand, it won’t “take any option off the table” including “if the Time Warner deal is not able to be completed,” CEO Greg Maffei told analysts today. The big question now is “how onerous the conditions will be, not only for Comcast but for the industry as a whole” to persuade Justice Department and FCC officials to approve the deal. He also noted that since Comcast is just offering stock, which has slightly declined in value since it reached terms with TWC, “we’ll see what price actually gets paid.” Meanwhile, Maffei rules nothing out saying execs will watch “with interest” how the Comcast deal proceeds. Liberty and Charter have engaged in “some talk of other forms of consolidation….We certainly learned in this process that there were many investors interesting in investing in consolidation.” The likely loss of TWC doesn’t diminish Liberty’s interest in buying the minority stake in SiriusXM that it doesn’t already own. The recent offer was “not driven” by a desire to harness the satellite radio company’s cash flow to help support a cable acquisition. The SiriusXM offer is “the right deal for Liberty and SiriusXM shareholders.” If independent directors disagree, … Read More »
The longtime TV host and unapologetic Dodgers fan will host an hourlong talker on the LA-centric sports channel that launched Tuesday. SportsNet LA said Larry King At Bat will bow March 18, featuring interviews with baseball greats and experts, celebrities and Dodger folk. Larry King‘s premiere guest will be Orel Hershiser, who pitched the Dodgers to their most recent World Series victory in 1988 and is the newest member of the team’s announcing crew. SportsNet LA, which was announced 13 months ago, was born of the 25-year multibillion-dollar deal Time Warner Cable inked with the Dodgers for broadcast rights.
Related: Will Consumer Anger Over Sports TV Costs Boil Over In 2014?
The same day that Disney launches its mega-hit Frozen in the digital realm, the company is announcing a cloud-based purchase and storage service for its films. In a new deal with Apple, Disney Movies Anywhere goes live today exclusively through iTunes, kicking off with more than 400 Disney, Pixar and Marvel titles such as Iron Man 3, Finding Nemo and Mary Poppins. The service allows users to browse, buy, manage and watch movies on PCs and iOS devices using an app or website. The move comes 15 months after the company announced it was pulling the plug on Disney Movies Online, its barely-known and costly Internet pic service.
Not that DMA is without precedent.
In many ways, DMA is Disney’s answer to UltraViolet. While the House of Mickey has not been a part of the UltraViolet gang, the cloud-based digital rights library has been backed by many of the other major studios as well as Lionsgate, DreamWorks Animation and HBO, among others. With two such systems now on the movie market, there undoubtedly will be concerns about consumer confusion over DMA and UltraViolet, which debuted in 2011. The latter’s backers want the service to be the industry standard and to provide consumers with a single digital locker for their movies. A desire the new DMA now challenges.
Additionally, the tie-up with Apple is key for Disney. Right now UltraViolet titles can be played on Apple devices, with the help of an app, but don’t show up in iTunes. DMA is powered by KeyChest, Disney’s adaptable technology that can integrate with any existing distribution partner as well as work with new ones to enable access to digital content. DMA bolsters the companies’ ties with Apple. Last year, the Disney Channel app was made available on Apple TV. Read More »
What goes up must — keep going up? That’s what investors seem to think about Netflix, even after it unveiled a “mutually beneficial interconnection agreement” with Comcast widely believed to include payments to guarantee that its broadband customers receive “a high-quality Netflix video experience for years to come”. Share prices for the market’s biggest gainer in 2013, with stock values +312%, are up another 21.4% so far in 2014 — and touched yet another new high today at $449.69. The price retreated a little to close at $447, +3.4% on the day. Investors believe that Netflix used its leverage to influence Comcast’s $42.5B deal to buy Time Warner Cable to negotiate payments that will be low enough to keep profits growing and high enough to help it dominate rivals. “Few others can match [Netflix's] spend without incurring massive losses,” Janney Capital Markets’ Tony Wible says. Barclays Capital’s Kannan Venkateshwar also sees the deal as a positive for Netflix, even though this is “the first time in the cable industry’s history a content provider will pay for direct access to the [broadband] pipe.”
Related: Will TV Programmers Have To Consolidate If Comcast Buys Time Warner Cable?
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UPDATE, 2:53 PM: DC-based public interest group Public Knowledge raised its concerns over the Netflix-Comcast deal in a statement Sunday. Said John Bergmayer, Senior Staff Attorney at Public Knowledge:
“No one on the outside knows what is happening in this market. However, it is clear that residential ISPs should be in the business of charging their users for access the Internet, not of charging the rest of the Internet for access to their users. This ensures that they are putting the needs of their users first.
From what information is public, it appears that the largest ISPs are demanding payment from networks that deliver content and services that residential broadband consumers demand. Because the large residential ISPs themselves are the ones keeping the terms of their deals secret, it is raises the question of whether they have something to hide.
One way to prevent competitive problems from arising, and to reduce the need for future regulation, is to prevent ISPs from holding other networks hostage. This raises concerns in light of the proposed Comcast/Time Warner Cable merger.
“What has characterized these traffic disputes has been their opacity. We call on the Federal Communications Commission, the Department of Justice, and interested members of Congress to ensure that the broadband market continues to meet the needs of its users, and allows companies like Netflix (and the next Netflix) to offer the services that users have demonstrated they want.”
PREVIOUS, 10:06 AM: There may be smoother streaming ahead … Read More »
Dish chairman Charlie Ergen had little new to report about his company’s negotiations for a broad, long-term deal to carry ABC, ESPN and other Disney-owned channels. “It’s taken longer than any of us would like,” he said in a call to discuss his company’s Q4 earnings — adding that he’s “cautiously optimistic” they’ll have a deal before his company’s next quarterly conference call. There’s been no material change in the discussions, “just changes in technology and what might happen. Slight changes in strategy. It’s just a complex deal trying to look out into the future.” But he’s encouraged because Disney CEO Bob Iger, as a member of Apple’s board, “has looked at it in ways that others have not.”
Related: Dish Says Comcast-Time Warner Cable Deal Will Create “Seismic Shift”
Chairman Charlie Ergen made the comment to analysts today noting that Comcast’s proposed $42.5B acquisition of Time Warner Cable would concentrate broadband, video, and content in “a single company…That’s going to send a seismic shift across our industry in ways we can’t predict today.” While he isn’t ready yet to take a formal position — he wants to see the companies’ formal filings and talk with his board first — he says a merger “increases the risk to everybody else” in the business. It also “doesn’t hurt” the case for a merger of Dish and DirecTV. If it’s OK to combine the No 1 and No. 4 pay TV companies, then it’s “hard to see why you couldn’t put the No. 2 and No. 3 providers together.”
Ergen challenged Comcast and TWC’s claims that they don’t compete. “They certainly do. They compete for content.” For example, last summer, if CBS had to negotiate a new carriage contract with Comcast and TWC — as opposed to just TWC — then “CBS would probably be paying them to keep it up. Dish doesn’t have that kind of scale…We send our check every month with a smile.” He added that one “reasonable concession for the Comcast team to make” would be to tie the rates it pays for programming to the prices that other distributors pay — known as a Most Favored Nation agreement. “The merger is of enormous scale … Read More »
Time Warner Cable may be beyond the reach of Charter Communications, but CEO Tom Rutledge says he isn’t out of the deal game yet. Charter is “still interested in wisely acquiring subscribers,” he told analysts this morning, suggesting that he and his top shareholder, Liberty Media’s John Malone, are still hunting. And he may not have given up on TWC: Charter hasn’t withdrawn its proposed slate of independent directors for TWC, and Rutledge declined to say whether he might urge Washington regulators to challenge Comcast’s $42.5B all stock offer that outbid Charter. “I haven’t taken a position,” he says. In response to a different question he noted that government-required conditions on any deal “could have an impact on the business.” The CEO adds that consolidation can make the operation more efficient, but rejected the popular notion that a bigger company would find it easier to negotiate lower programming costs. “I’m not sure that Time Warner [Cable] and Charter together would change our scale from a programming cost perspective,” he says. Even with multiple deals to add smaller operators “it’s hard to put together scale that would meaningfully change it.” On other matters: Rutledge is unimpressed with Netflix‘s claim that Verizon and other broadband providers are slowing transmission speeds. “Netflix is putting themselves in a position to throttle their own network to gain sympathy,” he said without explanation. “It’s an interesting approach.” The CEO spoke with … Read More »
While he hasn’t decided whether to oppose the deal in Washington, DirecTV CEO Mike White says Comcast’s $42.5B pact to buy Time Warner Cable would result in “unprecedented media concentration in one company.” The No. 1 satellite service provider is “still assessing some of the competitive implications” but White wants to “ensure it’s appropriately scrutinized” — especially the “effective broadband monopoly they might have in two-thirds of the country.” The owner of NBCUniversal also would have a lot of power to raise content prices. That “creates some significant changes in the competitive landscape that we have to think hard about.” Couldn’t Comcast use its clout, with 30M subs after a merger, to slow the rate of increase in programming costs? Perhaps, but “it’s a complicated dynamic because that leverage may not flow through to its competitors.”
White says he’ll continue to resist high programming costs.”None of our customers have an income like those of us on the call here.” He wouldn’t comment on the state of the carriage negotiations with The Weather Channel, which went dark on DirecTV in January, but says that his company “may have lost a few thousand customers in the first quarter” due to the dispute. “Fundamentally I continue to believe if your viewership goes down ….that should be reflected in the price.” Read More »
This should give the Discovery chief a little more job security at a time when the air is filled with deal talk following Comcast’s $42.5B agreement to buy Time Warner Cable. Liberty Media Chairman John Malone gave significant rights to his Class B shares — equal to about 29.5% of Discovery’s total votes — to David Zaslav in a February 13 arrangement just disclosed in an SEC filing. The Discovery CEO can vote them if Malone doesn’t choose to do so. And Zaslav has exclusive rights to buy them if Malone decides to sell. They’ll negotiate a price and, if they can’t agree, Zaslav has a right to match any deal Malone negotiates with someone else. The agreement is only good as long as Zaslav is CEO or on Discovery’s board. It recognizes “your successful tenure with Discovery” and expectation that it will continue under a new contract that runs to the end of 2019. There are a few caveats, though. The agreement doesn’t apply if someone buys Discovery, and Zaslav can’t give anyone else the rights to Malone’s shares. Malone controlled 6.1M Class B shares — about 93% of the total — when Discovery filed its latest proxy statement last year. The B shares have 10 votes apiece compared with 1 for each of the publicly traded … Read More »
Time Warner Cable execs sounded pretty darn sure of themselves last week when they told investors that they believe Comcast’s $42.5B acquisition agreement will fly in Washington and benefit shareholders. But the No. 2 cable company had to be more measured in its annual report, out today: TWC “may fail to complete the proposed merger with and into Comcast and, even if the merger is successfully completed, the anticipated benefits to the Company’s stockholders may not be realized” it says in the SEC-required “Risk Factors” section of the yearly filing. The deal only works if shareholders of both companies, as well as antitrust regulators and the FCC, approve it. But there’s a chance that might not happen ”on a timely basis or at all.” And if the deal does close “there can be no assurance that the anticipated benefits to the Company’s stockholders will be realized.” TWC notes that it faces “certain purported class action stockholder litigations relating to the proposed merger with Comcast.” (Here’s one of them.) It will “vigorously defend against any such claims” although “the costs of the defense of such lawsuits and other effects of such litigation could have an adverse effect on the Company’s business, financial condition and operating results.”
Hell still hath few furies like a shareholder with legal representation feeling scorned. In what seems to be the first but most likely not the last such legal move, a Time Warner Cable shareholder has launched a potential class action suit against the company to halt its acquisition by Comcast in a $45.2B all-stock deal. Filing in the Supreme Court of New York (read it here) one day after the TWC-Comcast deal was formally announced on February 13, Breffni Barrett is accusing TWC, its chairman and CEO Rob Marcus, former Sen. John Sununu and other members of the company’s board of cutting themselves a sweet deal and breach of fiduciary duty. The shareholder also says in the action, which also names Comcast as a defendant, that the mega-merger risks regulatory wrath. Of course, while it is easy to file an action such as this one, it is very hard to prove that a board acted as badly as Barrett alleges — especially when it had its own teams of lawyers going over every detail before anything was made public. Additionally, the merger is subject to approval by shareholders from both companies as well as a careful look from both the FCC and the Department of Justice. Put together, those facts mean there is little chance of Barrett’s filing stopping much of anything.
What A Comcast-TWC Could Mean For Hollywood
Wall Street Sees Mixed Impact From Cable Mega-Merger Plans Read More »
Miss Deadline’s top TV stories? Catch up on the week now:
Bob Costas Returns To Sochi Olympics Coverage Monday (Photo)
By Lisa De Moraes – Bob Costas returned to the NBC Olympics studios at the International Broadcast Center in Sochi, Russia, today to prepare to resume his primetime and late night hosting duties tomorrow night.
‘Snake Salvation’ Star Dead From Snake Bite; NatGeo To Air Tribute Episode
By Jen Yamato – With the first season fully filmed National Geographic had no plans for a second season of Snake Salvation, says a network rep. Now in the wake of Jamie Coots‘ death NatGeo is working up a special tribute episode “so people can understand Pastor Jamie and his method of worship and see that he died doing what he believed was his calling.”
Actors Added To Fox’s Matt Hubbard, ABC’s Jeff Lowell Comedy Pilots
By Nellie Andreeva – Ely Henry (Suburgatory) and Asif Ali have been cast as leads in Cabot College, Fox‘s multi-camera comedy pilot from Matt Hubbard, Tina Fey and Robert Carlock.
R.I.P. ‘The Waltons’ Patriarch Ralph Waite
By The Deadline Team – The man who played the patriarch on CBS’ long-running series The Waltons has died. Ralph Waite was 85. He also had been recurring since 2008 as Papa Gibbs, the father of Mark Harmon’s character, on NCIS.
Greta Gerwig To Topline CBS’ ‘How I Met Your Mother’ Spinoff
By Nellie Andreeva – Indie darling Greta Gerwig will lead the cast of How I Met Your Dad, CBS’ spinoff from long-running comedy series How I Met Your Mother. Read More »