The FCC will seek more information from Adelphia, Comcast and Time Warner about their pending transaction, an ex parte filing said Fri. Commission staff are deciding what to ask about the proposed $17.6 billion takeover of Adelphia, a source said. Last Thurs., lawyers representing the 3 cable operators met with 9 FCC officials, including media bureau staffers, the filing stated. It didn’t provide more on the “impending request for information.”
SBC and Time Warner officials will address a Senate Judiciary Subcommittee hearing on video competition Wed. at 2 p.m. Time Warner Cable CEO Glenn Britt and SBC Pres. Forrest Miller will be joined by NCTA head Kyle McSlarrow. Cable executives will testify beside media activist Mark Cooper, research dir.-Consumer Federation of America, and The America Channel CEO Doron Gorshein. Gorshein has claimed cable has blocked carriage of independent programmers including The America Channel (CD Aug 5 p9). Precursor CEO Scott Cleland, also slated to address the hearing headed by Senator DeWine (R, O.), told us he plans a presentation showing that telecom competition has increased. In response to a committee request, he said he'll recommend a Congressional telecom rewrite start with “a new, clean slate” that replaces what he called “legacy technology-specific regulation.” Officials at NCTA, SBC, TAC and Time Warner Cable declined to discuss executives’ planned testimony. The House may hold a hearing similar to the Senate panel’s event, which had been expected (CD Aug 8 p5).
Comcast, banking on VoIP service for growth, isn’t in a rush to add wireless service, CEO Brian Roberts said. Comcast Digital Voice (CDV), the cable operator’s VoIP service, will be available in 20 markets by year’s end, Roberts told a Goldman Sachs conference in N.Y.C. Next year “is the year that you will really see the company focus all its guns on CDV,” he said: “We do not believe we need a wireless phone [service] to be successful in that… we're not that anxious… We are exploring how to have our products work in the wireless world.” The company’s set-top device for digital simulcasting, which Roberts described as resembling a cable modem more than a set-top box, costs less than $70 each. Comcast’s Enhanced Basic cable service will continue to be offered at no additional cost to cable subscribers, he said. The company, having repurchased about $3 billion in stock in the past 18 months, will likely continue to use free cash flow for buybacks: “We do think there is risk in our business from new entrants, but perhaps not as much as the market seems to believe.” Roberts echoed previous comments that the company doesn’t foresee a major transaction in the near future: “No, there’s not a lot of opportunity, so we've focused on innovation from within.”
SBC, in comments on a video report, asked the FCC to examine cable programming deals and whether competition is being thwarted. Access to popular shows including sports programming “remains a troublesome problem,” SBC said in response to an annual FCC inquiry in the market for delivering video. The filing is the latest salvo by SBC in its effort to argue cable has an unfair advantage in selling pay-TV services and that Bells shouldn’t be subject to all Title 6 cable rules. The NCTA asked whether all Title 6 obligations are necessary. “It is reasonable to reconsider whether the social obligations continue to make sense,” the group said.
Susquehanna Communications, which is trying to sell itself, has held talks with Comcast, a source said. Comcast already owns 30% of the cable operator, which has more than 230,000 customers. The 16th-largest U.S. cable provider could be valued at as much as $800 million, the source said, adding that a deal may be near. Comcast declined to comment on a Bloomberg News report it offered to buy the cable operator. Asked about the sale talks, Susquehanna Pfaltzgraff CFO John Finlayson said in an interview: “When we have something to announce, it will be announced… We are not in direct contact with any potential buyers,” referring inquiries about the cable sale to UBS. The media firm said in April it was trying to sell its radio and cable properties (CD April 22 p9)
Viacom bids to get cash for carriage of CBS may flop, cable industry officials told us, hewing to retransmission consent negotiation tactics. Reaction wasn’t favorable to remarks by Viacom Pres. Leslie Moonves he will charge pay- TV firms the same fee for CBS they pay for USA Network (CD Sept 16 p7). Charter, Cox, Insight and Time Warner won’t do so, officials from those firms told us Fri. Many of those companies previously said they won’t pony up (CD July 22 p6).
Court TV could be sold as soon as next year if an option is exercised, Liberty Senior Vp Mark Carleton said. A put or call option in 2006 is “perpetually open after that,” he told a Merrill Lynch Media & Entertainment investor conference. Carleton said he doesn’t know whether Liberty has held talks “with our partners on that asset.” The media investment firm -- itself transitioning from owning small media stakes to a focus on strategic investments -- owns 50% of the network that broadcasts criminal trials and related programming. Time Warner owns the rest.
Time Warner, under pressure by a financier, expects its earnings to grow in 2005 as sales rise, it said. Cash flow will rise at a “high-single digit” percentage rate in 2005 from 2004’s $9.9 billion, the firm said, repeating earlier forecasts. As much as 40% of that will be free cash flow, the media giant said “in anticipation” of an investor presentation set for late Tues. by Entertainment & Networks Group Chmn. Jeffrey Bewkes. Carl Icahn, who wants the firm restructured, and allies in a group of investment funds plan to nominate at least one person as a director at Time Warner’s next annual meeting. The group, which owns about 2.6% of the stock, cited a share price decline under CEO Richard Parsons and “noted that there were no shareholder-nominated directors on the board when Time Warner made the egregious error of undertaking the AOL transaction,” Icahn said in an SEC filing late Mon. Time Warner is “carefully reviewing a range of options to increase the value of our company, including those proposed by Mr. Icahn and his group,” it said in a statement to us. The firm’s annual meeting will occur in May, a spokeswoman said. Icahn’s demand that Time Warner spin off Time Warner Cable was echoed by Fulcrum Global Partners analyst Richard Greenfield. In a client note titled “eBay’s acquisition of Skype is Negative for Cable Industry; TWX Should Deconsolidate Cable Now,” Greenfield said the firm should separate cable from the rest of its operations “sooner rather than later.” The firm has said it plans to spin off some of its cable unit after buying Adelphia with Comcast for $17.6 billion. “Investor views are likely to deteriorate as competition rises to new levels in 2006 and beyond,” Greenfield wrote. “If Time Warner truly believed in the cable business they would be buying Adelphia for 100% cash, rather than creating a separate investment vehicle via the ’stub’ plan,” wrote the analyst, who has criticized that action in the past.
Some 55,900 La. and Miss. subscribers of Charter have no service due to hurricane damage, officials said. Most homes without service also lack power, said Rob Pladl, dir.-technical operations for Charter’s Southeast division. Charter, like other cable operators (CD Sept 7 p5), has accounted for most employees, with only 2 of 314 in the 2 states and Ga. unaccounted for. The company is shipping 3,000 set-top boxes and needs 500 more, said a Sun. status report to the FCC. “Fiber splicing proceeded at a torrid pace throughout the affected areas,” the report said. But “power utilities restoring service had several occasions to cut cable and cause outages in Charter restored areas.” The company said better coordination is needed. Some systems in areas hard hit by Katrina, including Slidell, La.’s, may not be restored for months. “While crews have begun assessing and repairing the damage, it is not possible to state when service will be fully restored or when the full extent of damage will be known,” a Charter unit said in an SEC filing Fri. “At this time we are not able to estimate the impact to Renaissance’s financial results; however, the impact will likely be material.”
Comcast may continue to carry both analog and digital signals for the foreseeable future, an analyst said, citing a Thurs. meeting with company executives at the firm’s Philadelphia hq. COO Steve Burke said “if the company could reclaim all 80 analog channels tomorrow it wouldn’t know what to do with the bandwidth,” Banc of America Securities cable analyst Douglas Shapiro wrote in a client note. “The significance of this is that it may never be in the position where it has to provide a digital set-top for every TV in the home.” Burke’s remarks also indicate the transition to DTV may not be over for a decade or more, said cable consultant Steve Effros. “It may be more efficient to continue to use a very limited portion of our bandwidth for analog distribution,” said Effros, “rather than go to the expense, which Wall Street is worried about, of putting digital boxes on every conceivable set.” Comcast declined to comment. Shapiro wrote that Comcast co-CFO John Alchin, also speaking at the meeting, said Comcast doesn’t expect “a major recapitalization,” although officials said it will continue to use free cash flow to repurchase stock or for a dividend. Comcast, which Burke said was “chastened” by its failed bid for Disney, “doesn’t believe that any of the 6 major media companies are viable targets,” the analyst wrote.