To paraphrase a line from Mark Twain, reports of the cable TV industry’s death have been greatly exaggerated. Cable operators are well focused on two opportunities: expanding their broadband Internet business and seeking out mergers and acquisitions to gain economies of scale.
Even the “cord-cutting” clouds that have eroded cable TV operators’ video subscribers recently might have a silver lining: cable TV providers have a strong broadband internet infrastructure in place – essential for access to over-the-top (OTT) services.[subscribe_reminder]
On the consolidation front, Charter Communications has moved quickly to gain the benefits of consolidation, announcing a $55 billion bid for Time Warner Cable (TWC). Charter also is offering another $10 billion to acquire Bright House Networks.
Bottom line: consolidation will continue to be a viable strategy to help cable providers achieve economies of scale. Cable operators also are in the catbird seat when it comes to broadband Internet -- a business model that will continue to deliver competitive and earnings gains.
Just weeks after regulatory scrutiny forced Comcast to abandon its planned megamerger with Time Warner Cable (TWC), Charter Communications has inked a $55 billion merger deal with TWC. The St. Louis-based cable operator separately is offering another $10 billion to acquire Bright House Networks. The two deals would quadruple Charter’s subscriber base to 24 million and boost the St. Louis-based cable company’s ability to compete.
Cable providers also have an edge when it comes to broadband connections to consumers – and they likely will continue to be in the pole position for high-speed Internet for a while longer. According to a recent report by Leichtman Research Group Inc., cable MSOs added more than 1 million net broadband subscribers in the first quarter of 2015 – representing nearly 86 percent of overall broadband growth.