Friday, August 28, 2009

Intended consequences for the cable industry?

A press association that doesn't like people to link to its articles recently noted that the U.S. Court of Appeals overturned a cap on cable system ownership.

But I think that MediaMemo still likes it when it link to its articles, so I'll quote from them:

If the court’s decision holds up, it could well start another round of dealmaking similar to the one we saw at the beginning of this decade in which the industry consolidated to about half a dozen major players.

So what will big companies like Comcast do? While some expect them to try to secure more programming, Peter Kafka wonders if something different will happen:

But what if the company deploy its assets to bulk up with more subscribers instead? Investors in Cablevision (CVC), the smallish, New York-based cable system that is a perpetual supposed takeover target that never gets taken over, like the idea: CVC shares are climbing modestly in a flat market.

Now some could argue that the Feds will come out against this and try to reinstate the caps, ostensibly leading to more competition in the market and better deals for consumers.

But that analysis assumes that the cable industry is competing against the cable industry. It isn't. Cable providers are competing against satellite, people who still get their TV from antennas, and this here thing called the Internet. So it may be in the interest of the Feds to allow Comcast to bulk up to compete against Dish, Google, et al.

Let's face it, even when formerly competitive environments are reduced to a single company, the remaining company has trouble surviving. Remember that Sirius XM is still losing money.
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