Light Reading

Comcast's TWC Coup: 3 Things to Know

Mari Silbey
2/13/2014
50%
50%

Comcast has never been short on ambition. So, for a moment, don't consider whether there will be regulatory pushback on its deal to buy Time Warner Cable. Consider only what the new Comcast empire will look like and how its rule over the US TV and Internet landscape will affect the masses. (See Comcast Strikes $45B Deal for TWC.)

No. 1. Video subscriber numbers
Comcast Corp. (Nasdaq: CMCSA, CMCSK) has said it will divest itself of 3 million subscribers of the combined company once it closes on the Time Warner Cable Inc. (NYSE: TWC) acquisition. With a net gain of 8 million subscribers, that would bring Comcast's total subscriber count to an estimated 30 million video customers, or approximately 10 million more customers than its closest competitor.

DirecTV Group Inc. (NYSE: DTV) rings in with just over 20 million US subscribers, while satellite TV rival Dish Network LLC (Nasdaq: DISH) has 14 million customers. Telecom competitors AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) have 5.5 million and 5.3 million TV subscribers, respectively. The closest cable company, Cox Communications Inc. , weighs in with about 4.5 million video subscribers.

The Proposed Comcast-TWC Goliath
If consummated, the proposed Comcast buyout of TWC would give the combined company control over huge swaths of the US, especially east of the Mississippi. This map from Mosaik shows the Comcast cable systems in red and the TWC systems in blue.
If consummated, the proposed Comcast buyout of TWC would give the combined company control over huge swaths of the US, especially east of the Mississippi. This map from Mosaik shows the Comcast cable systems in red and the TWC systems in blue.

No. 2. A programming power shift
The combination of Comcast and Time Warner brings more ammo into the combined cable company's court for content licensing negotiations. While content is still king, Comcast will enjoy huge leverage with programmers through its more massive audience reach. The threat of a TV programmer blackout becomes much less potent when you consider that broadcasters would have to withhold their content from nearly one-third of all US consumers. Comcast's sheer size will keep retransmission fees in check.

No. 3. A clear technology agenda
The cable industry is undergoing a major technological transformation. From the evolution of its underlying infrastructure to the shift in the devices that consumers use to connect to cable content, the wave of change is already having an extraordinary impact on the cable ecosystem.

Comcast has been driving the technology agenda in recent years with initiatives like the Reference Design Kit (RDK) and the Converged Cable Access Platform (CCAP). But the merger with Time Warner Cable will give it further influence in determining how technology changes get done. The transition to IP video delivery? Comcast will be in the driver's seat.

— Mari Silbey, special to Light Reading

(13)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
gconnery
50%
50%
gconnery,
User Rank: Light Sabre
2/14/2014 | 7:49:55 PM
Re: Tarnishing content's crown
So many angles to this...

I assume this will get approved, simply because Comcast and Time Warner don't really compete in very many locations.  And presumably they're planning to sell those off?  What are the 3 million?


Yet at the same time it will increase Comcast's power over content providers.  As others have speculated, if you're not willing to do a deal with Comcast agreeing not to provide your content to OTT companies how are people going to see you?

This *could* help to hold prices down.  Certainly Comcast should be in a better position to negotiate carriage fees with content companies.  Of course keeping Comcast's fees in check doesn't mean they'll be lowering our bills, but it might help to reduce the rate at which cable TV bills have been going up.


*Maybe* the FCC will negotiate some terms like network neutrality or something into the agreement.  Won't last forever of course, but better than nothing.

Does this mean the end of SDV?  TW deploys it all over the place, Comcast mostly does not.  Customers with TiVo or some other CableCARD solution hate the thing.  Will TW switch their technology (in the next decade say) to be more like Comcast?

Certainly this increases Comcast/TW's power in negotiations with Motorola/Cisco/Pace etc for STBs and back end equipment now that they are larger.  Expect cheaper STBs that we rent for the same price and aren't any better than what we have now.
KBode
50%
50%
KBode,
User Rank: Light Sabre
2/14/2014 | 8:50:48 AM
Re: Tarnishing content's crown
I think the one-two punch of a company with the kind of massive scale necessary to to strike uncompetitive licensing deals keeping content out of the hands of streaming competitors -- combined with a company that controls the conduit to the home and can increasingly impose usage caps designed to hinder streaming competitors -- is a pretty bad scenario.

I do think it will get approved by regulators however, with a few highly theatrical conditions applied to give the pretense of control.
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
2/13/2014 | 9:34:18 PM
Re: Tarnishing content's crown
Putting Comcast in the "driver's seat" may prove to be an unwise decision for consumers as well as for the industry as a whole. Letting one large concern take over such a large market often gives the greed factor a great place to breed. Technology may or may not speed along once a monopolistic scenario happens.
DHagar
50%
50%
DHagar,
User Rank: Light Sabre
2/13/2014 | 9:32:19 PM
Comcast's TWC Coup: 3 Things to Know
@Carol:  I am with you, this has "monopoly" written all over it.  As they further define and shape the market, there will be fewer competitors.  Being the only game in town is no good for anyone.

DHagar
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
2/13/2014 | 9:20:46 PM
Re: Tarnishing content's crown
Yes -- absolutely, a Freudian slip. Good catch, Dan. 
DOShea
100%
0%
DOShea,
User Rank: Blogger
2/13/2014 | 8:59:40 PM
Re: Tarnishing content's crown
I think you had a Freudian slip there - "aggravating" instead of "aggregating."
Carol Wilson
100%
0%
Carol Wilson,
User Rank: Blogger
2/13/2014 | 6:15:57 PM
Re: Tarnishing content's crown
The problem is that Comcast can argue -- and document - cable's dimishing share of the video business, It was down to 60% in 2012, due to share lost to satellite and telco providers. 

It may easier for regulators to question the wisdom of aggrevating so much broadband power in a company that also competes on the content side and has great incentive to make life difficult for OTT providers. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
2/13/2014 | 6:12:46 PM
Re: Tarnishing content's crown
This is a bad idea for the cable and Internet broadband market. It reduces choice and competition. 
KBode
50%
50%
KBode,
User Rank: Light Sabre
2/13/2014 | 5:22:13 PM
Re: Tarnishing content's crown
Yes I think that's probably about right. :)
Carol Wilson
100%
0%
Carol Wilson,
User Rank: Blogger
2/13/2014 | 5:20:49 PM
Re: Tarnishing content's crown
I think the New Yorker pretty much summed up how this will work for consumers:

http://www.newyorker.com/online/blogs/borowitzreport/2014/02/a-letter-from-comcast-and-time-warner-cable.html
Page 1 / 2   >   >>
Flash Poll
From The Founder
The New IP is actually bigger even than business. Like another hugely important tech that Light Reading is digging into right now, the New IP has the potential to change the world by fundamentally advancing what it is possible for people to achieve with communications.
LRTV Huawei Video Resource Center
Huawei Shares Its Vision of the Future of Mobile Networks Innovations

2|26|15   |   2:30   |   (0) comments


Mobile broadband is changing our lives. It's reshaping the Internet, industry, and society. It allows us to freely connect with one another anytime, anywhere. At this year's Mobile World Congress, Huawei will share its latest insights and newest ideas and technologies that will shape the future of MBB. They will showcase their end-to-end MBB solutions that will ...
LRTV Huawei Video Resource Center
Accelerate Digitizing, Boost Digital Business

2|26|15   |   6:14   |   (0) comments


A new digital revolution is leading us to a better connected world. Together with millions of digital partners, Huawei will help CSPs to build their digital service ecosystem and aggregate a wide variety of digital services. In this video, we find out how Huawei is going to help CSPs implement digital operations.
LRTV Huawei Video Resource Center
The Secret Recipe to Enabling Hyper-Growth Industries

2|26|15   |   3:38   |   (0) comments


With a number of successful cases on network capability exposure, Huawei is going to share the secret recipe to enabling hyper-growth markets with a step-by-step approach.
LRTV Documentaries
BTE 2015 Is Bigger & Even Better

2|25|15   |   03:13   |   (4) comments


This year's Big Telecom Event (BTE) in Chicago is going to provide more opportunities than ever for networking, getting to grips with key industry challenges and opportunities and, equally as important, having some fun.
LRTV Interviews
Light Reading ICT Leaders Roundtable at MWC 2015

2|12|15   |   1:07   |   (2) comments


On Sunday March 1, 2015, Light Reading will host an ICT Leaders Roundtable in partnership with Huawei. At this half-day event, CIOs, analysts and researchers will discuss key industry trends like virtualization in the cloud with a specific focus on new business models. Located at the luxurious Renaissance Hotel near the Fira Barcelona, space is limited so please ...
LRTV Documentaries
Going Green in 2015

2|12|15   |   02:04   |   (0) comments


Energy efficiency is set to be an incredibly hot topic in the telecom industry this year.
LRTV Custom TV
SDN & NFV: Where Are We Going From Here?

2|11|15   |   11:27   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss gives his perspective on why SDN and NFV should be tightly interconnected and how he sees the industry moving forward.
LRTV Documentaries
Time for Gigabit Europe?

2|9|15   |   01:27   |   (4) comments


Gigabit broadband networks are springing up all around the US and they'll soon become more commonplace in Europe.
LRTV Interviews
Brocade Brings New IP Vision to 2020 Vision Executive Summit

2|3|15   |   4:23   |   (0) comments


In December 2014, Light Reading gathered telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Brocade's Kelly Herrell shared his company's strategy at ...
LRTV Interviews
Brocade's Kelly Herrell on the New IP

2|2|15   |   12:36   |   (0) comments


In December 2014, Steve Saunders sat down with Brocade VP of Software Networking Kelly Herrell at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Brocade's approach to the New IP, the future of the telecom industry, and more.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
Upcoming Live Events
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
All Upcoming Live Events
Infographics
Net neutrality, broadband services and the current outlook on data consumption, as presented by the New Jersey Institute of Technology.
Hot Topics
Cyber Security Expert Warns: You're Doing It Wrong
Sarah Thomas, Editorial Operations Director, 2/23/2015
10 Weirdly Useful IoT Devices
Eryn Leavens, Copy Desk Editor, 2/24/2015
Small Cells Enabling Location Services
Sarah Thomas, Editorial Operations Director, 2/25/2015
Is FCC Weighing Net Neutrality Changes?
Mari Silbey, Independent Technology Editor, 2/25/2015
MWC: Let the Madness Begin
Ray Le Maistre, Editor-in-chief, 2/23/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Check out Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he had to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.
G'day! And welcome to an entirely new feature on Light Reading -- our weekly "CEO-to-CEO" interview.