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Netflix erects Icahn defense; Liberty Global sells 50,000 Horizon TV subscriptions; TWC posts Sandy update; DirecTV CEO is staying put

Charter Video Plan Good News for Cisco, Samsung

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
11/5/2012
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Welcome to today's broadband and cable news roundup.

  • Cisco Systems Inc. (Nasdaq: CSCO) and Samsung Corp. stand to gain as Charter Communications Inc. takes a page from the Cablevision Systems Corp. (NYSE: CVC) playbook and pursues a software-based video security system. Charter is seeking a two-year waiver to use set-tops with integrated security so it can have ample time to go all-digital and deploy a software-based security system that could be used in leased boxes as well as third-party retail devices. Under then-COO Tom Rutledge, Cablevision obtained a similar waiver in 2009 to aid its rollout of a security system based on the NDS (now Cisco) "key ladder," which is currently being used in Samsung-made set-top boxes. A successful deployment would help Charter shift away from pricey CableCARDs. Charter noted in its waiver request that, like Cablevision, it would employ a "simulcrypt" approach so it could continue to support its legacy security systems alongside the new security platform. (See Former Cablevision Exec Heads to Charter and Cablevision Scores Set-Top Waiver Extension .)

    Charter's already got some in-house know-how. James Blackley, an ex-Cablevision exec who recently joined Charter as EVP of engineering and information technology, was closely involved in the Cablevision deployment. Industry sources say Cablevision has been eager to have other U.S. MSOs adopt its system to help boost product volumes, attract more set-top suppliers, and, of course, drop unit costs. CableLabs , meanwhile, has already specified how a cable operator can implement Cablevision's Open Media Security (OMS) approach. Multichannel News first reported that Charter filed the waiver request at the Federal Communications Commission (FCC) on Nov. 1. (See CableLabs OKs the Cablevision Way.)

  • Netflix Inc. (Nasdaq: NFLX) has adopted a poison pill defense to protect the company against a hostile takeover by Carl Icahn, who recently acquired a 9.98 percent stake in the streaming video giant, Bloomberg reported, noting that it would be triggered if an "activist shareholder" acquired 10 percent of the stock, or an institutional investor bought 20 percent. (See Icahn: Netflix Sale Has 'Crossed Our Minds' and Icahn Nabs 10% of Netflix .)

  • Liberty Global Inc. (Nasdaq: LBTY) posted a third-quarter net loss of $22 million ($0.08 per share), narrowed from a net loss of $333 million ($1.18 per share) in the year-ago quarter, on revenues of $2.5 billion, up 4 percent. The MSO lost 90,000 video customers in the quarter, but added 180,000 digital cable additions. Liberty Global said it has sold more than 50,000 subscriptions for Horizon TV, a hybrid QAM/IP video platform it debuted in the Netherlands in September. Liberty plans to intro Horizon TV in Switzerland later this quarter, followed by intros in Ireland and Germany, its largest market, in 2013. (See Liberty Global Embarks on New TV Horizon.)

  • Time Warner Cable Inc. (NYSE: TWC) blogged Sunday that most of the remaining cable outages caused by the Superstorm Sandy in New York and New Jersey are due to power outages. Among the updates, about 6,000 customers are out in Staten Island; 14,000 in Queens (due in part to damage at the MSO's hub in the Rockaways); 1,600 in Brooklyn; and 12,000 in New Jersey and Mount Vernon, N.Y. Cable services were restored to about 90 percent of TWC's customers in southern Manhattan as of Sunday. (See Operators Slog Ahead in New York & New Jersey.)

  • Mike White has signed on to remain chairman, president and CEO of DirecTV Group Inc. (NYSE: DTV) beyond the end of his current three-year employment contract, which expires on Jan. 1, 2013. According to an 8-K filing, his new deal includes an annual base salary of $1.7 million, and twice that in bonuses in 2013 if White meets certain performance goals. White is also to receive a non-qualified stock option award valued at $12 million.

    — Jeff Baumgartner, Site Editor, Light Reading Cable

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    Jeff Baumgartner
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    Jeff Baumgartner,
    User Rank: Light Beer
    12/5/2012 | 5:18:06 PM
    re: Charter Video Plan Good News for Cisco, Samsung


    Charter acknowledged in the filing that its deployment would probably offer tougher sledding than Cablevision's.  Cablevision had the benefit of deploying in a very centralized, concentrated New York City metro (it has not yet deployed this to its Bresnan properties, to my knowledge), while Charter's will have to support it in more than 190 headends  in 25 states. 


    Makes me wonder if others will follow suit and get more big operators on a path that takes them away from clunky CableCARDs. JB

    Jeff Baumgartner
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    Jeff Baumgartner,
    User Rank: Light Beer
    12/5/2012 | 5:18:05 PM
    re: Charter Video Plan Good News for Cisco, Samsung


    Yeah, that was a smooth move by Cisco in many ways. NDS was suppose to help the MSOs drive a wedge, so Cisco went out and bought the wedge.  JB

    AESerm
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    AESerm,
    User Rank: Light Beer
    12/5/2012 | 5:18:05 PM
    re: Charter Video Plan Good News for Cisco, Samsung


    Scratching my head wondering how Cisco stands to gain here, then re-read and remembered the NDS angle. That was a quick acquistion. As for relative difficuilty, yes, there's only one large MSO that can control all its sytems from one swivel chair!

    cmmurrey
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    cmmurrey,
    User Rank: Light Beer
    12/5/2012 | 5:18:04 PM
    re: Charter Video Plan Good News for Cisco, Samsung
    An open-standard, IP-based successor to CableCARD would significantly benefit TiVo and other 3rd party retail devices. The solution that Charter is proposing requires a proprietary hardware chip that would not work beyond Charter and possibly Cablevision. Rutledge and Charter are clearly trying to save cost by not having to buy CableCARDs. If the FCC issues a request for comments on this filing, I will likely submit a response opposing the waiver suggesting that an alternative industry wide IP-based, open-standard, "downloadable solution", not requiring specialized hardware chip, be adopted.
    Jeff Baumgartner
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    Jeff Baumgartner,
    User Rank: Light Beer
    12/5/2012 | 5:18:03 PM
    re: Charter Video Plan Good News for Cisco, Samsung


    You're behind in the count, though, since Cablevision already got the FCC to approve its waiver... and Charter pretty much wants a  repeat performance. Not sure how the FCC can deny the waiver request when it was already granted to CVC.  But that doesn't mean we won't see some compelling arguments seeking a denial,  and I suspect the CEA will also try to fight this.  The last time, CVC argued that the NDS key ladder is already supported on a bunch of chips found in CE devices from Broadcom, STMicro, and Conexant. Still, i don't know where this would leave TiVo, or if TiVo could somehow support the NDS key ladder.


    NDS meanwhile pledged to offer this key ladder on an open basis and *claimed* that it can work with anyone's conditional access system... even though Cablevision is using NDS's Videoguard CA with the keyladder, so i place this in the I'll believe it when i see it category. JB '

    cmmurrey
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    cmmurrey,
    User Rank: Light Beer
    12/5/2012 | 5:17:01 PM
    re: Charter Video Plan Good News for Cisco, Samsung


    Earlier today I submitted my comments to the FCC in opposition to Charter Communications' request. My full filing can be read here or it should go live on the ECFS site sometime tomorrow. 


    Basically my opposition can be summed up as folllows, 





    Charter’s waiver request should be denied because it does not comply with the integration ban in a way that furthers the goals of Section 629. Consumer electronics companies will not manufacture retail devices that only work with one or two cable operatorsin certain geographical areas because consumers won’t buy such products. Consequently, Charter’s “solution” will hurt, not help, retail availability of navigation equipment by placing retail equipment at a competitive disadvantage in terms of cost, support and innovation. Charter’s motivation to support CableCARD will diverge from its own business interests which is precisely what common reliance is designed to prevent. Instead of granting a waiver that would undermine retail alternatives, the FCC should urge the industry to come up withan IP-based downloadable successor to CableCARD that everyone can use.




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