Light Reading
Analyst sees cable consolidation following the announcement of a $67B merger between AT&T and BellSouth

AT&T Deal Could Spur Cable Buys

Phil Harvey
News Analysis
Phil Harvey
3/6/2006
50%
50%

AT&T Inc. (NYSE: T)'s bid to buy BellSouth Corp. (NYSE: BLS) will definitely spark lots of fear and loathing among competitive carriers. (See Ma Bell Is Back!.) But analysts believe the move might also kickstart a new wave of consolidation amongst the cable MSOs, and it could mean some rocky times for satellite TV providers, too.

According to UBS Research analyst Aryeh B. Bourkoff, in a note sent to clients on Sunday, the war to be the preeminent full service communications company was stepped up considerably with the AT&T/BellSouth announcement Sunday afternoon.

"As the telcos become increasingly consolidated, we view Comcast Corp. (Nasdaq: CMCSA, CMCSK), Verizon Communications Inc. (NYSE: VZ), AT&T, and Time Warner Cable Inc. (NYSE: TWC) as the leaders among the full-service U.S. communications players, Bourkoff writes. "However, as the smallest of the four, TWC could be poised to spark a wave of consolidation in the cable sector, and we believe potential candidates include Cablevision and Insight Communications."

Bourkoff writes that as soon as Time Warner Cable finishes its purchase of part of Adelphia's assets, the company will be publicly traded and "could be in an acquisitive position." The $17.6 billion sale of Adelphia's assets by Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable are expected to close in the second quarter.

But cable consolidation isn't going to be the only immediate change in the competitive landscape following a combination of AT&T and BellSouth. Satellite TV providers will also find themselves in a predicament – especially DirecTV Group Inc. (NYSE: DTV)

"We believe that this announcement is fundamentally more of a positive for EchoStar, while somewhat negative for DirecTV," Bourkoff writes in his Sunday note to clients. He points out that EchoStar Satellite LLC 's DISH Network has a deal with AT&T, while BellSouth -– along with Verizon and Qwest Communications International Inc. (NYSE: Q) –- have deals with DirecTV.

Both satellite providers run some risk of being a stopgap until the RBOCs figure out a way to deliver TV services across their own networks. (See SBC Disses the Dish.) But as AT&T is the lead dog in its merger with BellSouth, DISH seems the early favorite to benefit more.

Bourkoff writes that as many as "50% of DTV's [DirecTV's] net sub adds over the next 3 years are estimated to originate from the Telco partnerships." He adds, "We believe there could be downside pressure to DTV sub growth targets, in the likely event that the BLS/DTV migrates to the broader AT&T/DISH deal."

Time Warner Cable and DirecTV officials weren't immediately available for comment.

— Phil Harvey, News Editor, Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
DCITDave
50%
50%
DCITDave,
User Rank: Light Beer
12/5/2012 | 4:03:37 AM
re: AT&T Deal Could Spur Cable Buys
Which cable combo would be most likely in BellSouth's territory?

ph
materialgirl
50%
50%
materialgirl,
User Rank: Light Beer
12/5/2012 | 4:03:31 AM
re: AT&T Deal Could Spur Cable Buys
Perhaps there is no hurry. If Genband is half right, and it takes 10 years for the BOCs to move off legacy gear, they are stuck pigs anyway. Imagine what GOOG or CMCSK will be up to in 10 years?
alchemy
50%
50%
alchemy,
User Rank: Light Beer
12/5/2012 | 4:03:27 AM
re: AT&T Deal Could Spur Cable Buys
Phil Harvey asks:
Which cable combo would be most likely in BellSouth's territory?

It doesn't work that way. The MSOs aren't carved up geographically like the bell operating companies. In the BellSouth territory, you have presence from Comcast, Charter, Time Warner, Cox, and Bright House.

In my opinion, the reason why you'd want to merge MSOs is so they can pool resources to buy RF spectrum and enter the 3G cellular business. I think this is unlikely to happen. Comcast is huge. Cox is private. Time Warner Cable is owned by a giant. Charter might get swallowed since they're not all that healthy but it's hard to imagine M&A among the big 3.
Flash Poll
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
AT&T: We'll Bundle Fixed Wireless & DirecTV
Mari Silbey, Independent Technology Editor, 9/15/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
Photos: Qualcomm Takes Over San Francisco
Sarah Reedy, Senior Editor, 9/19/2014
Connecticut Cities Crowdsource Gigabit Nets
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/15/2014
Like Us on Facebook
Twitter Feed