Weekly Pay-TV Notes: TWC-Charter Merger, Comcast In Focus
The pay-TV industry saw significant activity this week, with Dish Network recently petitioning the FCC to reject the proposed Charter-Time Warner Cable merger. Dish believes that the merger will result in a “suffocating duopoly” led by Comcast and the Charter-Time Warner Cable combo. On a separate note, Comcast subsidiary NBC’s drama Blindspot ‘s impressive ratings were rewarded when the freshman drama became the first new series of the 2015-16 TV season to be picked up for the full season. On that note, we discuss below these developments related to the pay-TV space over the past few days.
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Dish Wants FCC To Reject TWC-Charter Merger, AT&T Not Opposed To Deal
Dish Network (NASDAQ:DISH) has recently petitioned the Federal Communications Commission (FCC) to reject the proposed Charter-Time Warner Cable (NYSE:TWC) merger. [1] The satellite-TV provider believes that this merger “would be no better for the public interest” than the earlier proposed Time Warner Cable-Comcast (NASDAQ:CMCSA) merger. Dish has reasoned that the merger will result in a “suffocating duopoly”, where two broadband providers (Comcast and the Charter-Time Warner Cable combo) will control about 90 percent of the nation’s high-speed broadband market. Dish believes that such a scenario would be a threat to online video, as the two companies will not need to collude in order to put pressure on online video distributors (OVDs). The companies will be able to shut off an OVD from most of the country’s internet homes by merely implementing parallel foreclosures, i.e. one of the two following the other. Dish’s stance is in total contrast to companies such as Netflix (NASDAQ:NFLX) and Cogent, which have endorsed the merger. AT&T (NYSE:T) also made its stance clear, stating that it is not opposed to the merger but it also wants a careful review of the deal’s impact on emerging online video products. [2] These companies are putting out their views as the FCC had earlier opened a comment window on the deal. [3] October 13 has been set as the deadline by which the initial comments need to be submitted to the FCC.
Time Warner Cable’s stock gained around 0.5% over the week through Thursday. We currently have a price estimate of $198 for Time Warner Cable. For the full year, we estimate revenues of $23.7 billion, in line with the consensus estimate, and EPS of $6.86, compared to a consensus estimate of $6.58.
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Comcast Subsidiary NBC’s Blindspot Gets Full Season Order
Comcast (NASDAQ:CMCSA) subsidiary NBC’s freshman drama Blindspot became the first new series of the 2015-16 TV season to be picked up for the full season. [4] The freshman drama received a full season order based on its impressive ratings. Airing at 10PM on Mondays, Blindspot has been the season’s best rated new series in the 18-49 adults demographic. Blindspot’s first three episodes have averaged a 2.7 rating/9 share in the 18-49 adults demo and close to 10 million viewers overall in live-plus-same-day results. The show’s success comes as a welcome shot in the arm for NBC, as the 2014-15 season was bittersweet for the broadcasting network. NBC managed to retain its number one ranking in the 18-49 adult demo for the primetime season, benefiting from the record-breaking viewership for the Super Bowl and the popularity of its shows such as The Blacklist and The Voice. [5] However, the lack of any freshman hits was disappointing for the broadcasting network. Shows such as Allegiance, A to Z, Bad Judge, State of Affairs, Constantine, One Big Happy, About a Boy and Marry Me failed to generate audience interest and were discarded after single seasons. NBC is hoping to rectify the situation this season, and Blindspot’s early success will give the network confidence that the show can sustain its momentum throughout the season.
Comcast’s stock gained around 0.9% over the week through Thursday. We currently have a price estimate of $67 for Comcast. For the year 2015, we estimate revenues of just under $73 billion, compared to a consensus estimate of $73.19 billion, and EPS of $3.28, compared to a consensus estimate of $3.30.
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- DISH Petitions FCC to Deny Charter/Time Warner Cable Merger, October 13, 2015, Business Wire [↩]
- AT&T says not opposed to Charter-Time Warner deal, asks FCC for careful review, Oct 15, 2015, Reuters [↩]
- FCC Approves Charter-TWC Protective Orders, September 2, 2015, Multichannel News [↩]
- NBC’s ‘Blindspot’ Gets Full-Season Pickup, October 9, 2015, The Hollywood Reporter [↩]
- Ratings: NBC Wins 2014-15 TV Season; CBS Is Still Most Watched Network, May 20, 2015, TVLine [↩]