In a shifting programming landscape, will cable companies find their core competency is actually in the very cables they’re named for?
The two supergiants of cable TV, Comcast and Time Warner Cable, will merge in a friendly deal, with Comcast acquiring 100 percent of Time Warner Cable’s outstanding shares. The deal is so big that to push it past regulators Comcast may have to dump three million subscribers. The two companies don’t directly compete with each other in most markets, having grown at a heady time when all cable was frontier land and companies got rich establishing their operations discretely–there was plenty of land to settle. But the merger comes at a time when many, including Cablevision CEO James Dolan, doubt the future viability of cable TV–despite famous successes like John Stewart’s Daily Show, Breaking Bad, and the whole HBO juggernaut. A recent New Yorker article by Ken Auletta on Netflix and the future of television addressed the popular idea that, as Internet programming gains in penetration, cable companies may find that their core competency is actually in the very cables they’re named for–and that delivering data to the home, whether that data is Internet or traditional television, may well be the future.
Brian L. Roberts, the Comcast CEO, said that Time Warner has “created a pure-play cable company that, combined with Comcast, has the foundation for future growth.” In investor language, pure-play means that a company is focused on a single industry or product. It’s the opposite of, say, General Electric with its myriad businesses ranging from satellites to ovens to finance. Does it mean Comcast is leaning more toward becoming a “pure-play”–the thing that gives Time Warner Cable such an attractive future? Is Comcast’s real core competency ultimately as a valuable utility, delivering Internet data to millions of households and businesses? Or is it the TV business, in which it has a dynamic role since buying half of NBC Universal in 2009–and the other half last year? From GE…
