Over the weekend, GigaOm's Stacey Higginbotham wrote a post on the revived consolidation chatter surrounding pay TV/cable television providers. There are rumors that Time Warner Cable is on the auction block--and that both Comcast and Charter are interested. Higginbotham argues that a merger of this magnitude could be worrisome for regulators--and consumers--because it will undoubtedly raise broadband fees and limit consumers' ability to "shop around" for more reasonable Internet access, especially if they're interested in eschewing pay TV in favor of online streaming. Consolidation was also a hot topic over the summer, before earlier talks fizzled. Albert Lai, our CTO for media & broadcast solutions, wrote about this "crisis of consolidation" for All Things D in July examining cable M&A's influence on consumer media consumption.
Earlier today, I spoke with Albert to understand if his perspective has changed at all since the news originally broke this summer. His response? Too many of the reports published today are focusing on the potential merger(s)' influence on internal cost reductions or market expansion opportunities. Instead, if consolidation is going to happen, then it represents more than just a bottom-line impact; it offers pay TV a chance to become more viewer-focused, adding value around content, access and services so that the industry can better align itself with consumers' viewing habits and preferences. Here's Albert’s take on the news in two parts:
- Business issue or change in the game? Consolidation still raises the issue of whether it allows for increasing innovation velocity for the pay TV operator (leading to transferred value to the viewer) or if it's solely for the sake of retransmission negotiation, customer aggregation and cost reduction.
- This is bigger than just pay TV. Industry watchers are interested in understanding where Intel's OnCue will land (Verizon?); and, there's still speculation that Hulu will partner with pay TV operators, acting as an extension of the pay TV side of TV Everywhere--aligning Hulu with the ecosystem it was originally intended to disrupt.
There's a tremendous amount of change afoot in the pay TV landscape, and the resurgence in consolidation discussion is only one component of the conversation. To ensure that TV--in its broadest definition (over-the-air, over-the-top, app-driven, etc.)--thrives, pay TV and programmers need to refocus their priorities so that consumer demand and viewer preferences emerge as the primary area of emphasis.