5 thoughts on “And Time Warner wanted to sell its cable business”

  1. I agree that selling the cable division is a bad idea. While the telcos are faltering on their TV offerings, cable is successfully rolling out its VOIP services. Cable definitely has the upper hand in the war (at least currently). As evidence, today AT&T said they had a whopping 18,000 U-Verse customers. By contrast, Comcast signed up 570,000 VOIP customers in the last quarter alone.

    That said, there is a reason why certain elements at TW want to sell the cable division. If they sell the cable division, they could then try to charge the cable division more for TW’s content. Right now, it doesn’t make sense to charge your own division a lot of money for your own content. If they sell the cable division, that would change. And perhaps they feel like they will be able to squeeze more money out of the other cable companies after they get more money from their own (former) business.

    And while the TW numbers are impressive for the quarter, I’m pretty sure they reflect the acquisition of the Adelphia systems. So its not like that big revenue spike was all organically created.

  2. There are a few reasons why selling TWC might be a good idea. Cable will soon be facing a bandwidth problem that may require more network investments. Wall Street won’t look fondly on that, this issue is probably why the Dolans are taking Cablevision private.

    Don’t count out the telco’s video offering. Verizon is installing customers as fast as crews can service customers. Service can’t keep up with demand. Once things become tight with cable, they will begin stepping outside their footprint to offer VoIP services nationwide and that will continue the voice trend to zero.

    That being said, I wouldn’t mind owning a cable company.

  3. Om – you should edit the article and mention the major impact that the acquisition of Adelphia assets has had on TW Cable’s financials. Otherwise, you’re not providing an apples-to-apples comparison.

    That being said, you’re spot on that TW has been lucky not to dispose of it’s cable business. The cable business provides distribution that their filmed entertainment and publishing divisions are losing rapidly. Focusing on content is great, but at the end of the day with noise increasing by the day, distribution is the name of the game.

  4. Good point Jay – updated the numbers. It has been a crazy day and didn’t get much time to even touch the computer since I posted the post.

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