The New Landscape of the Cable Industry

AFTER ADELPHIA: THE NEW LANDSCAPE OF THE CABLE INDUSTRY
[SOURCE: Multichannel News, AUTHOR: George Winslow]
The U.S. cable map has just changed. After 15 months of delays and regulatory wrangling, the $17 billion deal through which Comcast Corp. and Time Warner Cable will acquire Adelphia Communications Corp. and, at the conclusion, swap a number of systems, is expected to close today. This is how the numbers now add up: Time Warner Cable systems pass 27 million homes, up from about 19.8 million. The operator counts 14.5 million basic subscribers, up from 11 million. About 85% of those subscribers will be located in just five regions, or “clusters”: Southern California, where it will now serve 2.4 million households, up from 0.7 million; Texas, where it will serve 2.6 million, up from 2.0 million; the Carolinas, at 1.9 million, up from 1.7 million; Ohio, at 2.3 million, up from 1.5 million; and New York, at 3.1 million, up from 2.6 million. Comcast, meanwhile, will expand its total number of subscribers to 23.3 million, up from about 21.5 million in the first quarter of this year. It strengthens its presence in markets such as Washington, D.C.; Boston; Minneapolis-St. Paul.; major Florida cities and Pittsburgh.
http://www.multichannel.com/article/CA6357343.html

AFTER ADELPHIA: CLUSTERS EVERYWHERE
[SOURCE: Multichannel News, AUTHOR: George Winslow]
The Adelphia cable deal is scheduled to be completed today. Time Warner will boost its subscriber base by about 3.5 million, to 14.5 million customers. Comcast Corp., which will get about 1.7 million customers through the deal, will expand to 23.3 million cable homes. That will give the two cable companies control of roughly 58% of total U.S. television households. More importantly, both companies will control a combined 17 of the 20 largest markets in the United States. “It’s a parallel evolution to what’s happening on the phone side -- Bell Atlantic has gone away, BellSouth is going away,” said Janco Partners cable analyst Matt Harrigan. “It makes sense, especially when you look at the complexity of the product bouquet.” Fragrance aside, increased scale will allow both Time Warner and Comcast to deliver advanced services more efficiently. But Harrigan said he doesn't expect to see a new wave of consolidation in the industry for one simple reason -- a scarcity of available properties. “There aren't a lot of elephants left on the savannah,” Harrigan said. Instead, there may be more system swaps, particularly among smaller players. Miller Tabak & Co. media analyst David Joyce said. Mediacom Communications Corp. could pare down some non-core systems, and relatively new cable companies such as Suddenlink Communications, Bright House Networks and Bresnan Communications all could be involved in swaps to better cluster their operations. Creating large concentrations of customers in major markets is a fundamental strategy for cable operators such as Time Warner or Comcast. The ability to serve the vast majority of households in a given region allows them to more effectively market advanced services, as well as compete against satellite operators, who can reach every home, and telcos, which have lines into almost every one.
http://www.multichannel.com/article/CA6357493.html?display=Top+Stories

ADELPHIA DEAL MAY CUT TIME WARNER'S PROGRAMMING COSTS, BUT NOT CONSUMERS' BILLS
[SOURCE: New York Times, AUTHOR: Ken Belson]
What does the Adelphia deal mean for Time Warner? The cable giant will pick up 3.5 million new cable customers which represent a 29 percent increase and give it 14.5 million cable subscribers. The company, which already has a big position in New York, will also become the dominant cable provider in Los Angeles. Since key decision makers in the advertising and media worlds are concentrated in these cities, Time Warner Cable will become even more of a destination for programmers. “You will reach the mind-share folks” if your network is carried on Time Warner Cable, said Lowell Singer, an analyst at Cowen & Company. “If you’re a programmer, you have to be on there.” Precisely how much of an advantage Time Warner Cable can gain in cable channel negotiations is unclear since contract details are rarely disclosed and each programming contract is different. Time Warner expects programming costs to rise by around 12 percent for the remainder of the year. Time Warner will have to wait years for its existing contracts to expire before renegotiating them. Still, when Adelphia is sold, its programming contracts will lapse and Time Warner’s agreements will be applied, to the dismay of many programmers who stand to earn less money. Time Warner’s rates are roughly 10 percent lower than Adelphia’s. Whatever Time Warner saves on programming is unlikely to make its way into the pockets of consumers, at least not directly. The company is likely to use the money to offer new services that produce revenue, like digital phones and video-on-demand. Consumers get discounts for buying bundles of services, but they also spend more money. “What mergers demonstrate is that there is not competitive pressure to pass along savings to customers even with the Bells getting into the television market,” said Gene Kimmelman, director of the Consumers Union. “If people think the transaction will lead to lower prices, there’s no data to support it.”
http://www.nytimes.com/2006/07/31/technology/31adelphia.html
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