| 05.20.15 | Europe’s Altice buys 70% of Suddenlink for $9.1B, targets TWC

May 20, 2015
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Today’s Top Stories
1. France’s Altice buys controlling stake in Suddenlink for $9.1B, sets up possible TWC run
2. Altice already in talks with TWC, as Suddenlink’s Kent confirms departure
3. Cablevision sues Verizon, defends commercial targeting FiOS
4. Feds won’t allow Charter to buy TWC either, analyst says
5. Xbox One turns into cord-cutting threat with OTA tuner addition

Also Noted:
Spotlight On… Wireless’ Q1 report cards: Grading the top 8 operators
Xfinity On Campus expands to Rider; FCC may soon measure streaming video speeds and much more…

On the Hot Seat: Canoe’s Pizzurro on the company’s big pivot to dynamic ad insertion

From AT&T to Fatbeam: The top 10 (and more) biggest providers of fiber in the U.S.
Fiber availability to buildings and into other facilities such as cell towers and data centers has become a key issue as wireline operators look to fill their coffers with more enterprise and wholesale dollars. The equation is simple: Those service providers that have more building sites connected to their own network can deliver a larger set of Ethernet and cloud services and control the customer experience. So which companies are the largest providers of fiber in the United States? Find out in this Special Report.

How Verizon, AT&T, Sprint and T-Mobile stacked up in Q1 2015
The first-quarter earnings season is coming to a close, so now it’s time to see how the nation’s top wireless carriers stacked up against each other in terms of key metrics. Jackdaw Research analyst Jan Dawson has assembled these slides that provide an in-depth look at how Verizon Wireless, AT&T Mobility, Sprint and T-Mobile US performed in the first quarter of 2015. Special Report

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Today’s Top News

1. France’s Altice buys controlling stake in Suddenlink for $9.1B, sets up possible TWC run

Injecting a new element of complexity to a cable M&A wave that had been primarily focused on Charter Communications (NASDAQ: CHTR) and Time Warner Cable (NYSE: TWC), French telecom group Altice SA announced intentions to pay $9.1 billion for a controlling interest in Suddenlink Communications.

Billionaire Patrick Drahi, who owns Altice, has been pursuing European cable assets of late. This is his first purchase in the heated U.S. market. 

Altice plans to acquire 70 percent of Suddenlink from the St. Louis-based operator’s private-equity firm owners, BC Partners and CPP Investment Board. BC Partners and the Canada Pension Plan Investment Board will retain a 30 percent stake in Suddenlink.

“Our investment in Suddenlink, our first in the cable sector in the U.S., opens an attractive industrial and strategic avenue for Altice in the U.S., one of the largest and fastest-growing communications markets in the world,” Altice chief executive Dexter Goei said in a statement.

New Street Research’s Jonathan Chaplin said the deal shows that U.S. cable companies are undervalued relative to other cable assets around the world.

“We have been pondering the multiple gap between the U.S. and Europe for some time wondering what could be different,” Chaplin wrote in a note to investors Wednesday morning. “Altice’s bid suggests perhaps that nothing is different; the US is too cheap.”

The bid for one of the U.S. cable industry’s few remaining mid-sized operators comes as Charter has renewed its intentions to buy Bright House Networks. 

It is believed Bright House is merely a stepping stone for Charter’s end goal, the acquisition of No. 2 U.S. cable operator TWC. 

Analysts are already speculating that, in purchasing Suddenlink, Drahi has his eyes on the same prize–TWC. 

In a memo to staff Wednesday, Suddenlink CEO Jerry Kent wrote: “While our strong performance has afforded Suddenlink ready access to growth capital, we didn’t have the financial resources to participate in some of the recent, widely reported potential acquisitions,” Mr. Kent said. “The backing of Altice will better position the company to gain critical scale as a major consolidator in the U.S. cable industry.”

For more:
– read this Altice press release
– read this Reuters story
– read this Wall Street Journal story

Related articles:
Suddenlink bolsters 1 Gbps service push with deployment of Arris E6000 edge router
Suddenlink loses only 6,400 video subs in Q1, still touting decision to cut Viacom channels
Vodafone said to be in talks with Altice about buying Portugal’s Cabovisao

Read more about: acquisition
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2. Altice already in talks with TWC, as Suddenlink’s Kent confirms departure

Altice SA’s lightning-quick entry into the U.S. cable market continued through Wednesday morning, with reports swirling that billionaire Patrick Drahi’s French telecom group is already in talks to buy Time Warner Cable (NYSE: TWC).

The day began with Altice’s announcement that it had reached a deal to acquire a 70 percent stake in mid-sized St. Louis-based cable operator Suddenlink, spending $9.1 billion.

Speaking to unnamed individuals close to the deal, Reuters reported that deal talks between Altice and TWC are “ongoing.”

The news service quoted one individual as saying, “Altice is very keen on Time Warner Cable.”

Backed by John Malone’s Liberty Media, Charter Communications (NASDAQ: CHTR) has been widely seen as the favorite so far to step in and buy TWC following Comcast’s (NASDAQ: CMCSA) decision to abandon its merger quest in April.

As news of Altice and Drahi’s infiltration into the U.S. cable market broadened in scope Wednesday, Suddenlink CEO Jerry Kent confirmed that he will step down by the end of the year.

“I’m an entrepreneur,” Kent told Multichannel News. “I really don’t have the desire to be working in a subsidiary of another company. And, frankly, they have their own CEO.”

For more:
– read this Reuters story
– read this Multichannel News story

Related articles:
France’s Altice buys controlling stake in Suddenlink for $9.1B, sets up possible TWC run
Charter and Bright House agree to move forward with original $10.4B merger deal
Charter’s Rutledge: Merger with TWC would not ‘meaningfully change’ programming talks

Read more about: acquisition, Suddenlink
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3. Cablevision sues Verizon, defends commercial targeting FiOS

Cablevision (NYSE: CVC) has filed its second advertising-related lawsuit against Verizon (NYSE: VZ) in the last five months, defending a TV commercial that claims Verizon’s FiOS service partially relies on cable to deliver video and Internet into residences.

The suit, filed in a Manhattan federal court, comes after Verizon in April launched a proceeding before the Better Business Bureau’s National Advertising Division, which challenged Cablevision’s assertion that FiOS actually uses cable and is not “100 percent fiber. 

“Consumers deserve to make informed decisions based on facts, and Cablevision is asking the court to intervene to stop Verizon from attempting to continue to mislead the public,” the company said in a statement.

Responding to Reuters, Alberto Canal, a Verizon spokesman, said the lawsuit demonstrated Cablevision’s “appetite for confusing consumers.” He also reasserted that Verizon’s FiOS service operated on a 100 percent fiber-optic network.

“Since their network can’t compete against FiOS, they resort to legal stunts, which we will challenge vigorously,” he said.

In Cablevision’s TV commercial, a narrator says, “Verizon claims they’re all fiber optic. True or false? The answer is false.”

Verizon asked the Better Business Bureau to stop Cablevision from making that claim.

Competition in the New York-area ISP and video market is especially fierce right now between FiOS and Cablevision, the latter of which has been steadily losing pay-TV subscribers to the IPTV service.

In January, Cablevision filed a lawsuit against Verizon in federal court for the Eastern District of New York, alleging that the telecom made false and misleading claims about the MSO’s Wi-Fi service in ads.

For more:
– read this Cablevision press release
– read this Reuters story

Related links:
Cablevision confirms addressable advertising deal with Disney/ESPN
Desperate, white-hot M&A talk trumps idle chatter over skinny bundles, OTT at INTX
Cablevision’s Dolan makes public TWC merger proposal at INTX
Cablevision sues Verizon alleging deceptive advertising claims about Wi-Fi superiority

Read more about: Cablevision
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4. Feds won’t allow Charter to buy TWC either, analyst says

With the recent passage of Title II-based Internet regulation showcasing a heavy-handed political climate in Washington as it relates to cable broadband, Charter Communications (NASDAQ: CHTR) will likely run into the same regulatory hurdles that Comcast (NASDAQ: CMCSA) did if it continues its quest to buy Time Warner Cable (NYSE: TWC).

So says media analyst Richard Greenfield, who wrote in a post on Fortune Tuesday that the cable industry are “not being good listeners” in regard to the regulatory language being spoken by lawmakers these days.

“The dramatic shift in the political climate and consumer sentiment drove us in late 2014 to view Title II broadband reclassification as inevitable, convinced us that Comcast/TWC would be blocked in February 2015, and now leads us to believe Charter Communications will not be able to buy TWC, not to mention the possibility that the Department of Justice may look to break up Comcast,” Greenfield wrote. 

As supporting evidence, Greenfield cites several comments made by President Obama, who noted in November that “Cable companies can’t decide what online stores you can shop at, or which streaming services you can use and they can’t let any company pay for priority over its competitors.”

Greenfield added that cable companies are still examining the regulatory reactions to their M&A through a “video-centric lens” and not focusing on the implications of having their broadband subscriber bases usurp their TV customer footprints. 

He noted, “Most Americans enjoy television, with the cable industry having invested heavily to extend the reach of over-the-air TV beyond the bounds of antennas. Given the reach of over-the-air TV and the proliferation of multichannel video competition to the cable industry (first from satellite, then telecommunications such as Verizon, AT&T, and now Google Fiber and Internet-based video providers such as Sling TV and Sony Vue), the risks posed by video consolidation are relatively minimal with the courts twice striking down legislation to limit marketshare held by video distributors to 30 percent of all U.S. subscribers.”

For more:
– read this Fortune post

Related articles:
Charter and Bright House agree to move forward with original $10.4B merger deal
Charter’s Rutledge: Merger with TWC would not ‘meaningfully change’ programming talks
Report: Banks ready to go with $24B for Charter’s pursuit of TWC

Read more about: Cable Industry
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5. Xbox One turns into cord-cutting threat with OTA tuner addition

Microsoft (NASDAQ: MSFT) unveiled its long-awaited over-the-air tuner add-on for the Xbox One, immediately entering the gaming/entertainment console into the growing list of OTA devices targeted to cord cutters.

OTA antenna tuner dongle

Hauppauge’s new OTA dongle for Xbox One. (Source: Microsoft blog)

The Hauppauge TV Tuner, a dongle that fits into the console’s HDMI port while connecting to an OTA digital antenna on the other side, is retailing via Amazon (NASDAQ: AMZN) and the Microsoft store for $59.99. Microsoft is also packaging the dongle with a Mohu Leaf 50 antenna for $99.99, claiming a $30 price savings.

With the addition of the device, Xbox One joins a growing list of set-tops that allow TV viewers to access free over-the-air broadcast without a pay-TV subscription. TiVo is another early entry into this market with its Roamio OTA DVR, which requires a $15-a-month subscription. 

Hauppauge users will have the ability to pause live TV for 30 minutes, navigate channels via Kinect voice control and minimize the TV viewing screen to simultaneously play games and watch TV. 

Users can also stream OTA programming to other devices in the home using the Xbox app on Windows 10 devices or the Xbox One SmartGlass app on Windows devices. 

For more:
– read this Microsoft webpage

Related links:
Pay-TV subscriber growth saw weak Q1 but still added 10K, report says
TiVo markets cord-cutting DVR to Aereo subscriber list
Microsoft could demonstrate cable strength with Xbox One over-the-air tuner

Read more about: Microsoft
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Also Noted

This week’s sponsor is Rovi.

[Webinar] Integrated Voice Recognition and Activation Technologies
Thursday, June 11th | 2pm ET / 11am PT

Voice-controlled interfaces have moved beyond the iPhone to applications used by the TV video and home automation services of major cable and satellite operators. In this webinar, we’ll look at the advantages to deploying voice recognition and activation technologies. Reserve Your Spot Today!

SPOTLIGHT ON… Wireless’ Q1 report cards: Grading the top 8 operators

wireless subscribers in Q1 2015Shiny red apples and sweet talk won’t carry a major U.S. wireless operator very far when it comes to the quarterly grades given out by FierceWirelessTech. You want that “A”? You’ve got bring solid ARPU, revenue and other key metrics to the classroom. Working with Strategy Analytics, FierceWirelessTech has assembled a graphics-laden presentation on how the wireless industry’s top eight companies performed in Q1. The full report can be accessed here

More cable news from across the Web:

> Mad Men, the show widely credited with putting AMC Networks on the programming map, ended its eight-year run Sunday averaging 3.3 million viewers for its final episode. Story

> Amdocs has launched a new set of applications called High Definition Marketing Analytics that allow service providers to aggregate data from multiple marketing and customer care sources for analysis. Story

> The subscription-based Sesame Street Go streaming service is now available on Roku devices. Story

> Zoom Telephonics has signed a five-year licensing agreement to use the Motorola brand on its cable modem products. Story

> Comcast’s Xfinity On Campus streaming multiscreen service is now being integrated into Rider University’s two New Jersey campuses. Story

> Bright House Networks has a signed a five-year deal to provide Internet and voice services to St. Luke’s Cataract and Laser Institute locations in Tampa Bay, Fla. Story

And finally … The FCC is testing an expansion of its broadband speed measurement that  includes streaming video. Story


On the Hot Seat

Canoe’s Pizzurro on the company’s big pivot to dynamic ad insertion

Chris Pizzurro, Canoe

Pizzurro

with Chris Pizzurro, Head of Product Sales & Marketing, Canoe Ventures

Perusing the marketing material of Canoe Ventures, the JV launched by Comcast, Cox Communications, Time Warner Cable and Bright House Networks seven years ago to focus on advanced advertising solutions for the cable industry, you’d think you were driving by a McDonald’s. In November, for example, Canoe touted 10 billion impressions served, a major milestone in the business of dynamic ad insertion (DAI) into cable video-on-demand. In April, the joint venture said it had served up 2.56 billion impressions, just in the first quarter of 2015 alone. 

Describing Canoe’s upward trajectory, Chris Pizzurro, head of product sales and marketing for the group, breaks out the old hockey-stick metaphor. For anyone who has been closely following the trajectory of Canoe’s puck, this is a bit of a surprise. Canoe was formed in 2008 to leverage cable industry tech into next-generation advertising products. But the pointy-headed dream appeared dead in February 2012 , when Canoe announced that the bulk of its 129 employees were being laid off and only Pizzurro’s small team was being retained to focus on cable VOD.

At the INTX show in Chicago earlier this month, FierceCable gave Pizzurro a cup of surprisingly decent NCTA-purchased press room coffee and sat down with him for a little Q&A. Here’s what he had to say. 

FierceCable: So how did you get involved with Canoe?

Chris Pizzurro: A little over four years (ago), I was brought on at the tail end of Canoe 1.0, first as a consultant for the VOD business, so I wasn’t part of the other existing businesses. Six months or eight months in, that’s when the board came in and refocused the company, and they basically said that my product would be the product people are going to focus on.

FierceCable: How does cable VOD dynamic ad insertion differ from the original advanced advertising visions of Canoe, as laid out back in 2008?

Chris Pizzurro: There was a broader focus in terms of various products, but when you look at what the charter originally was, we actually held true to the charter. The products became a whole bunch of things, but the charter was how do you take the assets of the joint venture participants and how do you leverage that collective asset for the programmers’ benefit. That was the founding premise of what we do. It’s what we do now. We thought, maybe that’s through big data. OK, that didn’t work out. Maybe that’s through addressable advertising. Well that didn’t work out. Maybe it’s through interactive TV. That didn’t work out, either. So, sure, the other lines of business didn’t work out. But the actual charter does hold true to what the original premise was. 

FierceCable: Why did the Canoe gods pick your vision and your team? Continue…

MORE

Read more about: Hot Seat, VOD
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Voice-controlled interfaces have moved beyond the iPhone to applications used by the TV video and home automation services of major cable and satellite operators. In this FierceCable webinar, we’ll look at the advantages to deploying voice recognition and activation technologies. Register today!

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