Welcome to today's broadband and cable news roundup.
A sale of Netflix Inc. (Nasdaq: NFLX) is among the strategies that have "crossed our minds," billionaire activist investor Carl Icahn told Bloomberg TV soon after word spread that he had taken a 10 percent stake in the video streaming and DVD rental giant. He said the over-the-top video market is getting crowded and he expects to see some consolidation, identifying Microsoft Corp. (Nasdaq: MSFT), Google (Nasdaq: GOOG) and Verizon Communications Inc. (NYSE: VZ) among potential suitors. "We don't have any definite plans or proposals, but I think it's almost obvious that there should be consolidation," Icahn said. (See Icahn Nabs 10% of Netflix .)
He also thinks "nobody has a better platform than Netflix" to take advantage of a trend that is seeing consumers view more and more video via Internet-connected TVs, tablets and smartphones. Icahn believes Netflix should place less emphasis on older library content and spend a lot more developing original programming to help it compete with premium subscription services such as HBO. For more, check out the interview below:
Cable outages in areas affected by Hurricane Sandy had fallen "well under" 20 percent as of Wednesday morning, Broadcasting & Cablereported, citing David Turetsky, chief of the Federal Communications Commission (FCC) 's Public Safety and Homeland Security Bureau. The day before, the FCC said the average was about 25 percent. (See Service Providers Assess Sandy's Impact .)
Cablevision Systems Corp. (NYSE: CVC) said recovery efforts underway following the storm has caused it to reschedule its third-quarter earnings call to Tuesday, Nov. 6 at 11 a.m.
Online video publisher Brightcove Inc.posted a third-quarter net loss of $600,000 (2 cents per share) on revenues of $22.1 million, up 32 percent from the year-ago quarter. Brightcove ended the quarter with cash and cash equivalents of $30.8 million, down from $58.6 million in the previous quarter due primarily to its $27.2 million acquisition of Zencoder, a cloud-based video encoding service. (See Brightcove Raises $55M in Nasdaq Debut .)
He's certainly placing a bet that he can do well with another agitation.
We haven't gotten a response (yet), but here's the first comment so far from Netflix, according to the NY Times: "We have many shareholders, now including Mr. Icahn, and we're alwasy open to their perspective on how to build on our success."
Which doesn't say anything other than an acknowledgement that they've noticed. JB
So he is betting that Netflix is the next Instagram or OMGpop or Skype? Where the strategy is to attack someone with a money losing business in hopes that they buy you for an irrational sum of money?
The story of Netflix streaming to date is "great platform, shame about the content." It's hardly their fault; their early dominance painted a huge target on their back, leading content owners to cripple them by withholding and overpricing content.
So if someone is going to buy Netflix, they will have to solve the content problem, most likely by blowing up the one-size-fits all Netflix price-value model, paying more and charging more for premium content.
Buyer type 1 -- Large multichannel video provider (MVPD) that naturally already has strong content relationships but hasn't figured out streaming yet. Could DBS providers be at the top of this list?
Buyer type 2 -- Strong consumer brand, looking to jump start a weak video business. Maybe Sony or Google?
Buyer type 3 -- Consortium of content players, most likely Hulu, who decide they're ready to accelerate their bypass play, even while they individually continue to act cozy with the MVPDs.
Having Carl Icahn show up on your shareholders roster is like having Gordon Ramsey walk into your restaurant, camera crew in tow. It means things are bad, and they aren't likely to get better for you in the long run.
Gordo showed up at two restaurants in my area (Bergen County, NJ). One place closed in less than a year, and the other shut down after the chef/owner jumped off the George Washington Bridge. As far as Netflix becoming something other than a distribution channel by creating its own content, best of luck on that. I would guess that the failure rate for content producers is even higher than for start-up restaurants.
That's a frightful image, but Chef Ramsey also on occasion turns a restaurant around, non? That said, not sure I follow Icahn, despite what he sees as "self-evident" and "almost obvious." He points to $2.5b in rev domestically and the prospect of using that for fresh content. Net income in 2011 was $226m. Is that what he wants to tap?
He's certainly placing a bet that he can do well with another agitation.
We haven't gotten a response (yet), but here's the first comment so far from Netflix, according to the NY Times: "We have many shareholders, now including Mr. Icahn, and we're alwasy open to their perspective on how to build on our success."
Which doesn't say anything other than an acknowledgement that they've noticed. JB