Six Cable Deals We Might See in 2013
We've come up with six total, including a two-fer involving Charter Communications Inc., which we think is going to have one heck of an interesting 2013. And that's only if part of what we think might happen actually happens.
Oh, and we've declined to put TiVo Inc. on this year's list of acquisition potentials. We realize that it's been fashionable to put TiVo on these kinds of lists for the last eight years or so, so perhaps keeping them off this one means something will actually pop this time.
Or did we just mess that up by mentioning them in the intro? Hard to tell. Anyway, on to our list:
1. Comcast Buys ADT
Comcast Corp. is one of several major service providers trying to wedge itself into the fragmented U.S. home monitoring and security market. While its new, broadband-fueled platform does add stickiness to an operator's overall service package, turning home security and monitoring into a material business could take a while through organic growth.
Comcast's alternative: a play for the market leader, ADT Corp., which has about 6.5 million customers in North America and only recently became a standalone company. ADT's CEO says the company intends to go it alone, though, what else is the guy supposed to say?
Still, ADT's departure from the Tyco International Ltd. mother ship would make an acquisition less messy, and possibly open the door to Comcast … or maybe another service provider with big home security aspirations, such as Verizon Communications Inc.
2. Charter & TW Cable Swap Some Systems
Toward the end of the year, there was a lot of chatter to "expect" Charter and Time Warner Cable Inc. to swap some systems that would make operational sense on both sides. Much of that talk centered on seeing Charter swap its Los Angeles properties for TW Cable's in Dallas. We haven't found any fire to go with the smoke, but such a deal would finally unify much of the L.A. region for TW Cable, and give Charter a cluster to complement its systems in Ft. Worth. Such a deal might also require some cash to change hands, too, since the TW Cable Dallas system has about 350,000 subscribers, while Charter's L.A. property serves about 230,000.
3. & 4. Charter Goes On a Buying Spree (If two buys count as a spree)
Growth has been the the mantra at Charter ever since former Cablevision Systems Corp. exec Tom Rutledge took the helm in February. Charter will look to get some of that growth organically by being aggressive in its own footprint, where its service penetration levels trail most of its peers.
But we also expect to see Charter pump things up through some M&A action. Charter's already rumored to be in the running for Cablevision's Optimum West properties (the former Bresnan Communications systems), which serve about 360,000 customers.
But does Rutledge have something even bigger (make that much bigger) in mind? The other rumor is that Charter, the fourth-largest incumbent MSO, wants to make a play for Cox Communications Inc., the nation's third-largest incumbent cable op. Of course, this presumes that Cox would even be open to a sale. But it would be a shrewd move by Rutledge if he can pull it off. If Rutledge's plan is to not just to transform Charter into a massive and highly-influential cable operator but also to help him get out of the shadow of Cablevision and the Dolan family and establish his legacy, swinging a deal for Cox would certainly fit the bill.
5. CommScope Buys a CMTS
CommScope Inc. already has good edge QAM technology, but it needs a Docsis piece to complete its development of a fully integrated Converged Cable Access Platform (CCAP), a high-density system that will combine the functions of the edgeQAM and a cable modem termination system. CommScope is working with a partner to fill in the CMTS/Docsis element, but there's another possible option that could present itself.
It so happens that Arris Group Inc. is in the process of buying Motorola's Home unit, and, as a result, Arris could soon find itself with a redundant CMTS product line alongside Motorola's CCAP-in-progress. Rather than keeping it or chucking it, Arris might find a willing buyer in CommScope. Or, possibly, in multiple interested parties, such as Aurora Networks Inc. and Juniper Networks Inc., that happen to be looking for ways to amp up their cable access game.
6. Cisco and ActiveVideo Tie the Knot
We've hinted at it before, and we still think this deal would just make a lot of sense. ActiveVideo Networks Inc. and its video cloud technology fit well into Cisco Systems Inc.'s platform (Cisco's licensing ActiveVideo's software, anyway) and ActiveVideo has some big customers, led by Cablevision, and a strong patent portfolio. It wouldn't cost Cisco a king's ransom to land it.
— Jeff Baumgartner, Site Editor, Light Reading Cable