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. …
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.
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.
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 …
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.”
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. …
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.
In this week’s podcast, Deadline Executive Editor David Lieberman and host David Bloom kick the tires from several perspectives on that $45 billion Comcast-Time Warner Cable merger that would remake the cable industry. What will it mean for the cable industry, Hollywood and consumers? And what are its prospects for winning regulatory approval?
The Davids also check in CBS’s red-hot quarter and continued optimism on retransmission fees despite the big cable merger; welcome the long-in-coming videogame industry revival; and engage in shameless speculation about the latest reports of an Apple set-top device, and whether it might survive the Time Warner-Comcast merger.
Let’s not overthink Brian Roberts‘ rationale for engineering Comcast‘s $45.2B all-stock deal today to buy Time Warner Cable. I don’t think he did it, as some observers say, primarily because he’s concerned about the falling number of cable video subscribers, the threat of competition from phone and satellite companies, or to help resist rising programming costs. Roberts pulled the trigger because he could pick up some of the country’s most important cable systems — including Manhattan and parts of Los Angeles — without having to write a check. The deal will be virtually tax free. And his power will be secure even after TWC shareholders own 23% of Comcast’s Class A shares. Roberts controls the company’s Class B shares which have 15 votes apiece, enabling him to cast a third of all votes. The deal was almost a no-brainer: Roberts keeps Charter Communications and its largest shareholder, Liberty Media’s John Malone, from becoming rival industry powers. And he scores TWC’s 11M subscribers, 52 news and local programming channels (including New York’s NY1), and two regional sports networks in Los Angeles. In addition to NYC and LA, TWC has substantial franchises in large markets including Dallas, Kansas City, Milwaukee, Cleveland, Cincinnati, Buffalo, Rochester, Hawaii and most of the Carolinas. They complement Comcast’s holdings in Philadelphia, Northern California, Houston, Minneapolis, Boston, Seattle, and Miami.
Analysts may feel Comcast‘s just announced $45.2B all-stock deal to purchase Time Warner Cable is a good bet, but there will certainly be more than a few voices coming out against the mega-merger. One of the first to formally oppose the deal is the Parents Television Council. The sometimes controversial and always vocal advocacy group today said the deal “will invariably be anti-consumer and anti-family” in a statement. While the PTC is known for coming out against the TV rating system, on-air profanity and content, the group also has been consistent in its opposition to cable bundling — the source of its issues with the TWC-Comcast deal. “A horizontally and vertically integrated Comcast/Time Warner Cable entity would wield calamitous market leverage over consumers,” PTC president Tim Winter said today in a statement. “Unless and until Comcast – or, for that matter, any other potential suitor of Time Warner Cable – agrees to allow customers to choose and pay for only the cable networks they want coming into their homes, the Parents Television Council will vehemently oppose any such merger.”
The PTC has long advocated cable unbundling as part of its agenda, with the argument that the present system “forces families to underwrite explicit content.” The group isn’t the only one against bundling: Last May, Sen. John McCain introduced The TV Consumer Freedom Act of 2013 to, in part, end bundling, though that effort has been quiet since. Regardless, Comcast and TWC as well as investors will have to wait for a potentially long regulatory approval process from the FCC and the DOJ.
This is the question that will determine whether the companies can close their $45.2B deal. It will collapse in Washington if Comcast and Time Warner Cable can’t persuade FCC commissioners and, to a lesser degree, antitrust regulators that the No. 1 cable operator and owner of NBCUniversal won’t have too much power to determine industry winners and losers, and set prices, if it also owns the No. 2 cable company. Execs hope to head that off by arguing that pay TV is highly competitive, and by making some specific promises upfront. For example, Comcast says today that it will extend to Time Warner Cable systems the net neutrality commitment it made to win FCC approval for the NBCU acquisition. It vows to offer “affordable standalone broadband service” in TWC territories. Comcast says that TWC’s regional sports and local news channels will be available to other pay TV distributors at reasonable prices with a right to arbitration in case of a dispute. And it will expand public interest programming including local news and children’s fare, and will guarantee carriage of non-commercial educational TV stations even if they give up their broadcast spectrum — something the FCC wants to reclaim and auction to wireless broadband providers. “In today’s market, with national telephone and satellite competitors growing substantially, with Google having launched its 1 GB Google Fiber offering in a number of markets across the country, and consumers having more choice of pay TV providers than ever before, Comcast believes there can be no justification for denying the company the additional scale that will help it compete more effectively,” EVP David Cohen says.