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The CEOs of big cable operators on Wednesday shared a stage at INTX: The Internet and Television Expo, formerly known as the Cable Show, in Chicago and faced questions about possible deals, with the head of Cablevision Systems suggesting consolidation in his firm’s home market of New York.
“We’re focused on Time Warner Cable right now,” said TW Cable chairman and CEO Rob Marcus, who was sitting next to Charter Communications CEO Tom Rutledge, with whom he is expected to discuss possible deals as early as this week. “We had a great quarter and are feeling great about the position we are sitting in, and we are really not going to comment further on M&A.”
“Where is [Comcast chairman and CEO] Brian [Roberts]?” joked Rutledge, before saying: “The world is full of possibilities, but I can’t tell you any of them.”
Cablevision CEO James Dolan was ready to suggest one kind of deal though, saying industry players should focus on the consolidation of markets instead of country-wide deals, such as Cablevision’s home market of New York. “Consolidation of that marketplace would provide, one, a great deal of ingenuity and much more access to resources for the customers and lower prices,” he said. That would make for a “great business,” he said.
Marcus joked that “I am not sure if I got asked out on a date or to get married.”
“I think I’m proposing a commune,” Dolan replied without saying whether he would want to be a buyer or seller. Asked by moderator and CNBC media and entertainment expert Julia Boorstin what he was proposing, he said a consolidated market in New York could see Wifi distributed across the market, for example. Overall, it would provide “a lot of efficiency” and innovation, he said.
Would he want to do a deal with competitor Verizon’s FiOS? No, Dolan said. Would he want do a deal with TW Cable? “Yes,” he said. “And Comcast and any other operators there.” L.A. and Chicago would also benefit from such consolidation, he said. With one operation, “there is a lot more that we could do,” he said.
Cablevision’s stock was up more than 6 percent, near its 52-week high, soon after the comments as one analyst said investors likely read the comment to mean he was open to selling given that Cablevision is smaller than TW Cable.
Rutledge agree that efficiencies were needed in cable, saying his company’s planned deal with Comcast after the TW Cable combination would have included a lot of trades and swaps to improve local level scale. “The industry is still in a state, because of the way it grew up … where the efficiency of the platform isn’t [being] realized,” the Charter CEO said.
Cox Communications president Patrick Esser quipped: “I feel like I’m on Match.com. I feel like we’re all trying to update our relationship status right now in front of about 10,000 people.” He joked that none of them, except maybe for Dolan, wouldn’t do that on a stage.
Liberty Global CEO Mike Fries said he could maybe speak more freely than others, given that the international cable operator isn’t regulated by U.S. agencies, about comments made earlier at the conference by FCC chairman Tom Wheeler and the agency’s net neutrality rules. The FCC also opposed the Comcast-TW Cable deal.
Wheeler told cable firms on Wednesday that they must “overcome the temptation to use your predominant position in broadband to protect your traditional cable business” and that “broadband had to be at the center of our analysis” of the Comcast-TW Cable deal. He said net neutrality rules that kick in this June would provide “strong protections” for the open Internet.
The cable industry has expressed the same support for an open Internet, but has said it opposes the FCC regulation.
“I’m baffled by it all,” Fries said. “I found them very curious,” Fries said about Wheeler’s comments. “On one hand, he says that the cable industry through consolidation, through scale fostered innovation in programming as a closed network, yet there is a presumption of guilt and a punishment of success that this industry has achieved that I have never witnessed before in my life.”
The comment drew loud cheers and applause from the audience. “For years, I have asked European regulators and European business folks to look at the U.S. market for guidance,” Fries continued. “That is not happening today. And I’ll tell you, European regulators are also baffled by what’s happening here.”
He said European regulators have focused on ensuring “a level playing field,” “a light touch” and infrastructure competition, and “they have not arbitrarily defined broadband.”
Concluded Fries: “It’s terrible regulation … we’re happy to be abroad, let’s put it that way.”
Marcus said that TW Cable was operating “in a different environment than [Wheeler] seems to live in,” adding that competition has led to “a tremendous amount of investment” by the company.
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