Comcast feeding frenzy not foreseen


A federal court hit the FCC’s national cable TV ownership cap with the dreaded “arbitrary and capricious” label and instead of remanding for justification and/or revision, simply swept the caps aside. But cable’s biggest company, Comcast, is not expected to develop a sudden appetite for acquisitions.

“We don’t wake up every day saying how do we get bigger in cable,” COO Steve Burke told investors, according to Reuters. What the new ownership headroom does is allow the company to consider smaller acquisitions that make sense geographically and come at the right price.

Comcast currently controls about 25% of total US cable subscribers. The cap had been at 30%.
At least one analyst, Jason Bazinet at Citi, has suggested that Comcast take advantage of the situation and shoot up to 37% by working out a deal with Time Warner.

Bazinet saw at least seven ways that the merger would work to Comcast’s benefit. However, Comcast’s belief is that three million subs plus or minus really wouldn’t have that much effect on key things like negotiating programming contracts. It’s more interested in cherry-picking attractive contiguous systems, perhaps from companies reorganizing under bankruptcy protection such as Charter.

So Comcast may not be all that interested in Bazinet’s advice, but the New York Times took notice and wrote about it, and Wall Street rewarded both companies for their mentions with increases in share price.
However, another analyst speculated that the Obama administration is likely going to be down on consolidation, and may have the FCC challenge the DC Circuit’s ruling on the cable cap.

RBR/TVBR observation: We’re not keen on any one cable company having a massive edge when it gets into bidding wars with broadcast networks and local stations seeking syndicated fare. We’d like to see a challenge.