From CLEC Business: "Cable Hits Crossroads, Faces Consolidation"
[But first, in my earlier post (uplinked) I meant to type ratification, not rarification... ]
Now the story:
clec-planet.com
Cable Hits Crossroads, Faces Consolidation
May 11, 2000 (Reuters) - The cable TV industry has arrived at a major crossroads of change, facing increased competition, the likelihood of consolidation and the watchful eye of regulators as it attempts to deliver on promises about its offerings in the Internet age, industry officials said.
After spending millions laying the groundwork to offer everything from high-speed Internet access to digital services, cable executives gathered at the annual National Cable Television Association convention this week said the industry was now able to talk about performance rather than promise.
Demand for digital boxes is growing at a pace that is outstripping supply and the only limit to digital services is equipment makers providing advanced set-tops at a fast enough rate, NCTA President and Chief Executive Robert Sachs said.
By the end of the year, he said, about 75 percent of the country's cable systems will be fully two-way and broadband-ready. He expects there will be more than 10 million digital video subscribers by the end of the year.
While analysts see potential for cable operators, especially those able to offer a bundled package of services, they warn that the market has factored in certain expectations and it is important that the cable companies begin to deliver.
"The market needs to see revenue-generated units added," said Andrew Tisdale, managing director in Morgan Stanley Dean Witter's media group. Industry watchers expect new service penetration to drive growth as cable providers begin offering a range of new services.
Cable executives said they are ready to deliver and while most stocks in the sector have taken a beating amid recent volatility, they expect the market to soon realise their potential.
"There is more competition coming, but we are adding new services and revenue and are trading at two-thirds of the multiples of other industries that do not have new revenue around the bend," said Brian Roberts, president of Comcast Corp.
AT&T Broadband Chief Executive Dan Somers noted that the market does not fully understand the power of the industry. AT&T Corp.'s stock has come under pressure in recent weeks after the long-distance phone company issued a profit warning as it endures the growing pains of providing wireless, high-speed data and cable television services as well as phone service.
Its pending merger with MediaOne Group Inc., which will make it the No. 1 cable operator, could be approved by the Federal Communications Commission within a matter of days, FCC Chairman William Kennard said at the convention.
"I don't think it (the market) fully understands the power of our industry in the long-term. If we keep our heads down and block and tackle, we will be rewarded in our equity values," Somers said in a panel discussion.
As convergence progresses, many analysts and deal makers expect cable operators to come out on top over competitors such as satellite providers, but they also expect a wave of consolidation to sweep through the industry.
Credit Suisse First Boston analyst Laura Martin predicted that only three cable providers are likely to dominate the scene in the future: AOL Time Warner, the product of the still pending merger of the Internet media network and media giant announced in January, AT&T and a yet-to-be-determined third player. Deal makers also expect a wave of consolidation on the local front and cross-border transactions.
As consolidation takes place and creates powerhouses like AOLTime Warner that encompass content, distribution and Internet service, a host of regulatory issues are likely to crop up.
FCC chief Kennard said he would like the marketplace to work out issues that arise voluntarily, but not at the cost of consumers. He noted the recent dispute between Walt Disney Co.'s ABC Network and Time Warner Cable , which resulted in a public and political uproar when viewers in 11 cities were deprived of their ABC programming for more than 36 hours last week, as a reason for concern.
"There is an unsettling fear (among consumers) that in the Internet age so many things are beyond their control," Kennard said at a public policy breakfast with cable executive. "When (someone) cuts off people's television choices, it creates a huge debate and public outage."
"It has called into question whether the industry can be trusted to be an honest gatekeeper to the Internet and that concerns me," Kennard said.
Cable operators have heard the politicians and consumers' outrage loud and clear and repeatedly said that they realise the dispute was a lose-lose situation.
"We are going to see a lot less willingness to take this up to deadlines and use customers as pawns," said Joe Collins, TimeWarner Cable chairman and chief executive. "I think the result is that nobody is going to want to see theses things go on with any length or frequency."
Cable Hits Crossroads, Faces Consolidation
May 11, 2000 (Reuters) - The cable TV industry has arrived at a major crossroads of change, facing increased competition, the likelihood of consolidation and the watchful eye of regulators as it attempts to deliver on promises about its offerings in the Internet age, industry officials said.
After spending millions laying the groundwork to offer everything from high-speed Internet access to digital services, cable executives gathered at the annual National Cable Television Association convention this week said the industry was now able to talk about performance rather than promise.
Demand for digital boxes is growing at a pace that is outstripping supply and the only limit to digital services is equipment makers providing advanced set-tops at a fast enough rate, NCTA President and Chief Executive Robert Sachs said.
By the end of the year, he said, about 75 percent of the country's cable systems will be fully two-way and broadband-ready. He expects there will be more than 10 million digital video subscribers by the end of the year.
While analysts see potential for cable operators, especially those able to offer a bundled package of services, they warn that the market has factored in certain expectations and it is important that the cable companies begin to deliver.
"The market needs to see revenue-generated units added," said Andrew Tisdale, managing director in Morgan Stanley Dean Witter's media group. Industry watchers expect new service penetration to drive growth as cable providers begin offering a range of new services.
Cable executives said they are ready to deliver and while most stocks in the sector have taken a beating amid recent volatility, they expect the market to soon realise their potential.
"There is more competition coming, but we are adding new services and revenue and are trading at two-thirds of the multiples of other industries that do not have new revenue around the bend," said Brian Roberts, president of Comcast Corp.
AT&T Broadband Chief Executive Dan Somers noted that the market does not fully understand the power of the industry. AT&T Corp.'s stock has come under pressure in recent weeks after the long-distance phone company issued a profit warning as it endures the growing pains of providing wireless, high-speed data and cable television services as well as phone service.
Its pending merger with MediaOne Group Inc., which will make it the No. 1 cable operator, could be approved by the Federal Communications Commission within a matter of days, FCC Chairman William Kennard said at the convention.
"I don't think it (the market) fully understands the power of our industry in the long-term. If we keep our heads down and block and tackle, we will be rewarded in our equity values," Somers said in a panel discussion.
As convergence progresses, many analysts and deal makers expect cable operators to come out on top over competitors such as satellite providers, but they also expect a wave of consolidation to sweep through the industry.
Credit Suisse First Boston analyst Laura Martin predicted that only three cable providers are likely to dominate the scene in the future: AOL Time Warner, the product of the still pending merger of the Internet media network and media giant announced in January, AT&T and a yet-to-be-determined third player. Deal makers also expect a wave of consolidation on the local front and cross-border transactions.
As consolidation takes place and creates powerhouses like AOLTime Warner that encompass content, distribution and Internet service, a host of regulatory issues are likely to crop up.
FCC chief Kennard said he would like the marketplace to work out issues that arise voluntarily, but not at the cost of consumers. He noted the recent dispute between Walt Disney Co.'s ABC Network and Time Warner Cable , which resulted in a public and political uproar when viewers in 11 cities were deprived of their ABC programming for more than 36 hours last week, as a reason for concern.
"There is an unsettling fear (among consumers) that in the Internet age so many things are beyond their control," Kennard said at a public policy breakfast with cable executive. "When (someone) cuts off people's television choices, it creates a huge debate and public outage."
"It has called into question whether the industry can be trusted to be an honest gatekeeper to the Internet and that concerns me," Kennard said.
Cable operators have heard the politicians and consumers' outrage loud and clear and repeatedly said that they realise the dispute was a lose-lose situation.
"We are going to see a lot less willingness to take this up to deadlines and use customers as pawns," said Joe Collins, TimeWarner Cable chairman and chief executive. "I think the result is that nobody is going to want to see theses things go on with any length or frequency."
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