Light Reading

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        ADD A COMMENT
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
From The Founder
Ericsson's Hyperscale Datacenter System (HDS) 8000, featuring Intel's Rack Scale Architecture, caused a stir when it was announced at MWC 2015. For more on this revolutionary product, join me on Thursday, April 30 at 12:00 p.m. EST for a Super Webinar event, A New Hardware Paradigm for the Telco Data Center.
LRTV Documentaries
CableLabs' Clarke Updates Cable Virtualization

4|23|15   |   05:41   |   (1) comment


Former BT exec now leading CableLabs' NFV and SDN efforts explains key role of open source and updates efforts to virtualize the home network.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. II

4|23|15   |   08:19   |   (1) comment


In the second installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about cultural change, network slicing and technology advances.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. I

4|23|15   |   09:27   |   (3) comments


In the first installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about the incredible transformation underway in the communications networking industry.
LRTV Documentaries
LTE Paves the Way for the 5G Revolution

4|20|15   |   4:20   |   (0) comments


Håkan Andersson, head of 5G product strategy of the Radio Business Unit at Ericsson, discusses the role of LTE, the US and other industry verticals in building a true 5G ecosystem.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
LRTV Huawei Video Resource Center
Accounting for Better Solutions

4|10|15   |   02:31   |   (1) comment


Murad Yousuf, CTO at Saudi Arabia's Ministry of Finance (Dept. of Zakat & Income Tax), talks about the benefits of deploying router technology from Huawei.
LRTV Huawei Video Resource Center
What's in Store for Huawei & DataCore?

4|10|15   |   05:44   |   (0) comments


At the CeBIT trade show in Hannover, Germany, George Teixeira, CEO of software-defined storage (SDS) specialist DataCore Software, explains why he has just signed a partnership agreement with Huawei Technologies.
Upcoming Live Events
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
In its latest survey covering network operators' plans and strategies for ICT transformation, Heavy Reading asked telecom operators worldwide to identify the most important goals and objectives for their ICT transformation initiatives. Heavy Reading also asked operators about the importance of a "digital first" strategy, which enables customers to complete an interaction across different digital channels, such as web and mobile self-service and social media.
Hot Topics
Comcast Formally Ends Its Bid for TWC
Mari Silbey, Independent Technology Editor, 4/24/2015
What if the Comcast Merger Fails?
Mari Silbey, Independent Technology Editor, 4/20/2015
Google's WiFi-First Mobile Service 'Fi' Is Here
Dan Jones, Mobile Editor, 4/22/2015
Adtran Is Developing White Box GPON Tech
Ray Le Maistre, Editor-in-chief, 4/24/2015
Comcast Merger May Hinge on Hulu
Mari Silbey, Independent Technology Editor, 4/22/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Many leading communications companies can claim to have undergone significant periods of reinvention during their histories, but none have been through more major ...
Data Center Interconnect, or DCI, is one of the hottest sectors in telecom currently. Since coming back to Light Reading last year, prodigal-son style, I've ...
Cats with Phones
Learning Curve Click Here
Pierre could never remember how to use Excel.
Latest Comment