An Ignoble Experiment

2. Kagan: Retrans fees to hit $7.6B by 2019

Charter Communications (Nasdaq: CHTR) is close to securing bank loans and cash from "sovereign wealth funds and wealthy individuals" to finance a merger with Time Warner Cable (NYSE: TWC), the Wall Street Journal reported late Thursday.

But TWC may prefer a marriage with Comcast (Nasdaq: CMCSA), according to a separate WSJ report on Friday, which said TWC has held talks with Comcast in hopes of heading off a Charter bid.

MoffettNathanson analyst Craig Moffett noted in a research note that Charter would end up "frightfully levered" if it secured the debt financing needed to swallow TWC. "Hence the appeal of a Comcast white knight scenario," Moffett wrote.

The merger buzz news saw Time Warner Cable stock jump nearly 8 percent after the New York Stock Exchange opened Friday morning, with shares trading at $130.24 at 1:06 p.m. ET, up $9.38.

Deutsche Bank, Barclays and Bank of America are among the banks Charter has talked to about providing debt financing for the deal, according to the report, which cited anonymous sources.

Charter CFO Arthur Minson declined to comment on the talks with Charter on Wednesday, when he spoke at a Morgan Stanley conference in Spain. But outgoing CEO Glenn Britt told analysts on TWC's third-quarter earnings call on Oct. 31 that the nation's second-largest MSO was open to a deal that made money for shareholders.

"We certainly believe there are benefits to consolidation. However, we also believe that those benefits are pretty finite and easily knowable," Britt added.

Charter CEO Tom Rutledge and Liberty Media (Nasdaq: LMCA) chairman John Malone--whose company controls a 27.3 percent stake in Charter and four seats on its board--have said cable consolidation could help operators reduce spending on programming and technology. A Charter – TWC merger could also see the MSOs create efficiencies in Los Angeles and other markets where they both own cable systems.

For more:
- the Wall Street Journal has this story (sub. req.)

Article updated on Nov. 22, adding note that Time Warner Cable has reportedly talked to Comcast about a deal that could head off a bid from Charter.

Read more about: Charter Communications
back to top

This week's sponsor is Qualcomm.

Webinar: LTE Advanced in unlicensed spectrum?
Tuesday, December 10th, 1pm ET /10am PT

As the operators prepare for the looming 1000x data challenge, small cells and utilizing all spectrum resources are in the front and center. But, does it work? What is needed? Tune into this webinar to get the answers Register Today!

By Steve Donohue

Comment |

3. Cox launches Contour app on Google Nexus, Samsung Galaxy tablets

Pay TV distributors will have to shell out $7.6 billion to local broadcasters to package their stations in basic cable programming packages, SNL Kagan said in a report released Friday.

That means retransmission-consent fees paid to ABC, CBS, NBC, Fox and other station groups will jump by 130 percent compared to the projected $3.3 billion broadcasters are expected to collect this year.

One of the most striking items in the report is that Kagan has reduced its projections for pay TV subscriber growth over the next five years by more than 3 million subscribers. Last year, Kagan said it expected the U.S. pay TV universe to grow from 100.4 million at the end of 2011 to 103.7 million in 2018. The market research firm said it now expects pay TV distributors will count a total of only 100.6 million subscribers in five years.

In addition to collecting retrans fees, the Big Four broadcast networks have grown revenue in recent years by demanding that Sinclair Broadcast, Tribune and other TV station group owners that air their programming on affiliated stations pay them a cut of fees they collect from cable operators, telcos and satellite TV providers. Kagan said it expects reverse retrans fees to reach $2.25 billion in 2019, up from a projection of $1.02 billion in 2014.

The Kagan report doesn't mention the impact Aereo could have on retransmission-consent. Some pay TV distributors have said Aereo, which doesn't pay retrans fees, could give them leverage in their negotiations with broadcasters.

Fox, NBC, ABC and other broadcasters filed a petition at the U.S. Supreme Court in October aimed at forcing Aereo to shut down its service, which offers access to about 20 local TV stations in New York, Atlanta, Denver and several other markets.

For more:
- see the release

Read more about: ABC, Aereo
back to top

By Steve Donohue

Comment |

4. Dish Network upgrades program guide on Hopper, Joey

Nearly four months after introducing its Contour app on Apple's (Nasdaq: AAPL) iPad, Cox Communications said Friday that it launched an Android version of Contour on Google's (Nasdaq: GOOG) Nexus tablet and Samsung's Galaxy Tab 2, Tab 3 and Note tablets.

Most pay TV distributors have focused initially on the iPad and iPhone with companion applications such as Contour, which allows Cox subscribers to watch cable programming and control their set-tops. But with sales of Android tablets and smartphones outpacing iOS device sales, supporting Android is key.

Cox said in Friday's announcement that online and mobile viewing from its subscribers in the third quarter more than doubled views generated in the same period in 2012. It also cited a study that found more than half of Cox homes stream "video of some type" on smartphones or tablets, and that 20 percent used an Android device to do so.

"Having TV content accessible on a second screen truly enhances and personalizes the TV experience. Android users are now able to use the interface to discover content, set DVR recordings as well as start viewing shows on their device and switch over to TV with just a touch," Cox EVP and Chief Product Officer Len Barlik said in a prepared statement.

For more:
- see the release

On The Hot Seat: Cox CTO Hart talks about plans for 1-Gig Internet, cloud DVRs and results of FlareWatch trial

Read more about: Cox Communications, Contour
back to top

By Steve Donohue

Comment |

5. Midcontinent expands into home automation with Comporium deal

Dish Network (Nasdaq: DISH) made another tweak to its Hopper multi-room DVR platform and program guide, announcing Friday that it added a "Free for Kids" section to its Hopper On Demand section which uses content ratings to display only kid-friendly programs.

Dish's tweaked Hopper offers a "Free for Kids" section

Dish reorganized its TV user interface, displaying movie and TV show listings horizontally across the screen, and said subscribers can now use its DISH Explorer app on smartphones and tablets to control all TVs connected to the Hopper DVR and its Joey companion set-tops.

The enhancements Dish made to the program guide are similar to some of the features Comcast (Nasdaq: CMCSA) has on its new cloud-based X1 program guide, including offering subscribers who view linear TV listings the option to access video-on-demand content from programmers such as HBO and History.

Dish also announced on Friday that it added an HDMI-CES (Consumer Electronic Control) function to Hopper, which makes it easier for subscribers to watch both satellite TV programming and content from Blu-ray players and other CE devices on the same television. "The moment a user turns on the Hopper, the television will automatically adjust to the proper viewing input. For example, customers who last watched a Blu-ray no longer have to manually switch back to their TV's satellite input to view their Dish channels," the company said in the announcement.

For more:
- see the release

Read more about: Dish Network, IPG
back to top

By Steve Donohue

Comment |