Takeover Talks Continue in the Cable Industry

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Dec. 13 (Bloomberg) -- IHS's Erik Brannon and Bloomberg's Edmund Lee discuss potential consolidation in the cable industry with Pimm Fox Bloomberg Television's "Taking Stock." (Source: Bloomberg)


I'm joined by u.s. cable networks head of i.h.s., eric brandon.

He joins us from san francisco.

Good to have you both with us.

There are a lot of moving parts.

What's going on?

Let's start with charter communications.

It's run by tom rell itch.

He comes from cable vix, which was time warner cable before that liberty -- charter is looking to make a build for time warner cable.

There's an offer letter next week.

After months and months of back and forth speculation.

Why would they want to take over this cable network?

Why more consolidation now?

Well, as we all know, cable is facing many challenges, specifically from the likes of at&t and fios.

I believe that consolidation would be advantageous for the future company.

First, it would provide them some room from which they can innovate.

Secondly, it would private -- provide them cost efficiencies.

In theory, it is plausible that the combined company would be able to negotiate significantly more advantageous carriage deals with their programming partners, so overall i think that it would be a good move for both companies.

Is this going to give more power to already entrenched players?

You think of time warner cable or any cable system.

It's not as if you have a menu of 30 options.

You may have one, a dominant player in the market or make one or two or at the most three players to choose from.

That's a good point.

Cable basically virginia has had mononormallies but right now cable companies are suffering.

People are going to competitors or satellite companies so they've been losing subscribers.

Meanwhile, the programmer guides like discovery and cbs, they're asking for more money.

So the logic is they team up, they get bigger, have more leverage in negotiations with programmers and maybe more operating efficiencies when you have a bigger foot print.

That's in theory the reason.

Isn't there an argument to be made whether they make profits or not it doesn't have to be slated so that individuals or companies would have to bear the burden of whether this is a profitable industry.

No one props thank you horse and buggy whip.

Good point.

Whether it's consolidation or confederation authority, they need to compete against the netflixes and cbs and discover.

They're -- discovery.

They're getting it from all angles.

That's the reason that john himself has said we can make a deal happen.

Let's go after it.

What about those that deliver their content via satellite, whether it be dish network, for example?

Our projections indicate that cable is primarily losing subscribers to the likes of iptv players.

Ultimately i think the number of people that have converted to satellite will remain fairly constant so i don't really see this having a tremendous effect on either positive or negative subscriber growth of satellite.

Scripps network.

What's going to happen there?

They're a relatively small cable network group.

Discovery has similar kinds of programming.

Low cost programming in a way.

On the programming side, they could have better leverage in terms of negotiating with the distributors.

Look, we now have 10, 20 channels that you guys could carry so we want higher fees.

I think with discovery and scrips it's still early days.

But scripps could be an attractive target for another company.

Have the cable companies been technology innovators through this cycle?

That's a great point and another reason why malone has backed consolidation.

Comcast, which is the biggest cable company, they have a lot of technology that competes directly with next fix or

This text has been automatically generated. It may not be 100% accurate.


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