Cable Consolidation Beckons

November 26th, 2013 by · 2 Comments

The other big news this week that everyone is talking about of course is the possibility that TW Cable might get bought. The two suitors are said to be Comcast and Charter, with some even speculating the two could split up the assets in order to optimize their take and keep regulators from freaking out. 

I tend to spend less time on the consumer side of things, and hence don’t write as much about the cable MSOs as I otherwise might. But in this case, it seems to me that the enterprise opportunity might be helping drive such a deal through.

All the cable operators have been raising their game when it comes to metro Ethernet. It started with the SMB of course and they’ve become big in that space. But their appetite for the larger enterprises has been growing steadily.

One of the things that has been holding them back is the piecemeal nature of their coverage.  Significant consolidation may help the consumer business scale a bit better and get better leverage for content. However on the enterprise side they some icing on that cake in the form of a wider field of multi-site enterprises they can serve on their own footprint.

Recent fiber deals by cable operators suggest a growing interest in more comprehensive regional coverage beyond the patchwork of franchise territories. Cox’s purchase of EasyTel gave them both depth and breadth in Tulsa, while TW Cable’s planned purchase of DukeNet would put them just about everywhere in the Carolinas.

Yep, remember the DukeNet deal?  If Comcast and/or Charter close the deal for TW Cable, those assets would surely come along for the ride.  Neither has made a big inorganic move on the independent fiber front, but both have the same reasons to consider one as TW Cable did.

There’s another bit of inorganic activity that TW Cable has done that Charter and Comcast haven’t really followed up on yet.  TW Cable bought NaviSite for an enterprise cloud dimension a couple years ago.  Of the big cable operators, they were the only one to make that move while Verizon, CenturyLink, and Windstream each did on the ILEC side of the fence.  I wonder where that fits into the picture.

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Categories: Cable · Mergers and Acquisitions · Metro fiber

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2 Comments So Far

  • Info Seeker says:

    Rob – what do you think the chances are that a deal with TWC and one of the 3 potential partners actually gets done? TWC seems to get more expensive by the day as share continue to appreciate.

    • Brent Neader says:

      IMHO that increased share price only goes on so long. Obviously it is due to the primarily due to the speculation of a sale, BUT if some news happened to come out that said certain parties lost interest at the inflated price, or a sale wasn’t going to happen, then you can be sure the price would drop resulting in anger from share holders.

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