An Ignoble Experiment

2. Comcast hitting Wi-Fi accelerator as hotspot count nears 1M

Reversing a trend that had been going on for more than six years, Comcast (Nasdaq: CMCSA) said it added 43,000 video subscribers in the fourth quarter of 2013 as part of an overall 29 percent year-over-year increase of 649,000 voice, video and high-speed data customers. Last year during the same quarter Comcast lost 7,000 video subscribers.

Comcast lost 305,000 video subscribers for the full year, while gaining 1.296 million high-speed Internet and 768,000 voice subs. In the fourth quarter, Comcast also gained 341,000 HSD (high speed digital) subs and 168,000 voice subs. Overall, the nation's top MSO now has 21.7 million video subs, 20.66 million HSD subs, and 10.72 million voice subs to make a combined subscriber base of 53.08 million.

Cable communications revenues were up 5.2 percent year-over-year ($10.7 billion compared to $10.1 billion in 2012), led by video revenues that increased 2.3 percent to $5.12 billion. HSD was up 8.7 percent to $2.65 billion, and voice revenues were up 3.7 percent to $928 million. For the year, video revenues were up 2.9 percent to $20.54 billion, HSD was up 8.3 percent to $10.33 billion and voice was up 2.8 percent percent to $3.66 billion.

Business services was also on the rise, up 25.3 percent for the quarter to $876 million and 26.4 percent for the year at $3.24 billion, but advertising revenue took a hit in the quarter, down 7.5 percent to $602 million and, for the year, down 4.2 percent to $2.189 billion.

The overall Comcast business, including NBCUniversal, grew 6.2 percent in the quarter from $15.94 billion in 2012 to $16.92 billion in 2013, and 3.3 percent annually from $62.57 billion to $64.66 billion.

"Our results highlight the momentum we have achieved and how we are benefiting from scale, our investment in innovative products and from our focus on operational excellence," Comcast Chairman-CEO Brian Roberts said in a press release. "Cable's operating metrics improved across video, high-speed Internet and voice for both the fourth quarter and full year, with a return to video subscriber growth in the fourth quarter. NBCUniversal had an outstanding year, with growth in broadcast, cable, film and parks."

The results reflected "better than expected subscriber trends across the board," Jonathan Chaplin, an analyst with New Street Research said in a research note. "Comcast remains the cleanest story in the communications services landscape with consistent, strong execution driving better than expected trends in both business segments."

Chaplin further wrote that he saw upside in Comcast's "potential to pick up new, undermanaged cable systems from TWC (Time Warner Cable) as well as the ability to "increase the value of cable advertising by creating larger, regional blocks through cable system trades with Charter Communications (Nasdaq: CHTR) and others."

For more:
- Comcast issued this earnings release

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By Steve Donohue

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3. Charter-Comcast deal could push Time Warner Cable to accept acquisition bid

Comcast (Nasdaq: CMCSA) is approaching the milestone of 1 million Wi-Fi hotspots that its Xfinity customers can access, including hotspots in public areas and new neighborhood hotspots powered by wireless gateways Comcast is installing in subscriber homes, CFO Michael Angelakis said Tuesday.

Angelakis

Cisco (Nasdaq: CSCO) supplies Comcast with new Wi-Fi gateways that can transmit two SSIDs--one that is used by subscribers, and a second that enables neighborhood hotspots. Comcast CEO Brian Roberts told analysts on its fourth-quarter earnings call that Comcast has already installed the Wi-Fi gateways in about one-third of its high-speed Internet subscriber homes, and that 2014 will be a "significant year for deployments" of the gateways.

Comcast is also stepping up the rollout of its next-generation X1 digital cable service. The company will launch the X2 version of its cloud-based program guide by the end of the month, Comcast Cable CEO Neil Smit said.

Smit said Comcast is also talking to Cox Communications about deploying its X1 platform on its cable systems. "We'll be working together to explore the opportunity to identify where X1 might be useful in their business," Smit told analysts.

Also worth noting from Comcast's earnings call:

Comcast's programming costs jumped 8.6 percent in 2013, driven by increased retransmission-consent fees and sports programming costs, Angelakis said. The MSO expects programming costs to increase by 9 to 10 percent in 2014.
More subscribers are choosing to install new products themselves, with self-installs increasing by 42 percent in 2013 compared to an increase of 32 percent in 2012, Angelakis said. That has helped Comcast reduce truck rolls by 8 million in the last two years.
Comcast expects to post an increase in capital spending in 2014 as it invests in Wi-Fi, X1 and other new products.

Read more about: X1, fourth quarter earnings 2013
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By Jim Barthold

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4. Liberty Global, Vodafone battle to divvy up Europe's cable TV business

Charter Communications (Nasdaq: CHTR) reportedly has reached out to fellow MSO Comcast (Nasdaq: CMCSA) in an effort to complete its acquisition of Time Warner Cable (NYSE: TWC) in a move that could essentially put the nation's second largest MSO between a rock and a hard place.

Such a deal, as reported by Bloomberg, could overwhelm Time Warner's resistance to Charter's $37.4 billion bid because it would be obvious that Comcast has no interest in stepping in and bidding higher. Charter, reports have said, would like buy TWC's cable business for $132.50 per share. Its latest plan is to then sell off the New York City, North Carolina and New England cable assets to Comcast.

The agreement between Comcast and Charter is, at least for now, fluid and would supposedly depend on what Charter eventually ends up paying for TWC. If it goes through, Comcast would add 3 million subscribers, including the big-name New York City franchise area.

Charter's largest shareholder, cable icon John Malone, and Comcast Chairman Brian Roberts both share a vision of a more consolidated cable industry. Thus, a deal that devours, then shares the nation's second largest MSO would make sense from their perspectives.

For its part, Charter has been on an expansion push. Last year, the nation's fourth largest MSO grabbed Cablevision's (NYSE: CVC) Optimum West assets for $1.63 billion. Charter is also apparently confident enough that it can acquire TWC that it has already picked future directors that it would nominate to Time Warner Cable's board in early-to-mid February. That's further indication that Comcast is not sharing in the acquisition bid, but only picking up pieces from the new Charter.

For more:
- Bloomberg has this story

Read more about: Time Warner Cable
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By Jim Barthold

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5. i.TV tells GetGlue to get gone

The U.S. is hardly the only place where cable consolidation efforts--spurred at least in part by industry icon John Malone--are happening. In Europe, Malone's Liberty Global (Nasdaq: LBTYA) is in a battle with Vodafone Group to build continent-dominating pay TV empires.

Most recently, Liberty said it would (with regulatory approval, of course) buy up the remaining portion of Dutch broadband player Ziggo it didn't already own and create a single powerful Dutch cable TV entity. Vodafone, meanwhile, reportedly out from under the shadow of a potential AT&T (NYSE: T) acquisition and flush with funds after its Verizon Wireless (NYSE: VZ) assets divestiture, is looking to acquire Spain's Grupo ONO SA if and when it comes up for an IPO.

That's led to speculation that Malone, too, could be sniffing around the Spanish service provider.

The two have a history of competing, with Vodafone most recently beating out Liberty to grab Germany's Kabel Deutschland. An ONO acquisition would make sense since Vodafone already has a mobile phone network in that market.

"Vodafone has a cash stockpile and Liberty has a stated acquisitions strategy," Ovum telecommunications analyst Steven Hartley told Bloomberg. "As cable opportunities arise in Europe they will be the usual suspects."

Liberty, meanwhile, has been on a buying binge for at least the last 10 years where it's spent $50 billion to buy European properties in Eastern Europe, Germany and Scandinavia. Malone's potential interest in ONO was sparked by a comment to Bloomberg last year that he would be interested in southern European opportunities.

ONO, though, may take a backseat to a potential move on Belgium's Telenet Group, of which Liberty Global already owns 58 percent and could make a part-and-parcel play with Ziggo.

Of course Malone, the largest shareholder of U.S. cable operator Charter Communications (Nasdaq: CHTR), has been credited with spearheading that MSO's attempt to buy up Time Warner Cable (NYSE: TWC).

For more:
- Bloomberg has this story

Read more about: acquisition, AT&T
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By Jim Barthold

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