[opendtv] News: Comcast And Time Warner Go Out And In
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 30 Sep 2004 07:30:17 -0400
http://www.forbes.com/2004/09/28/cx_da_0928topnews.html?partner=technology_newsletter Comcast And Time Warner Go Out And In Dan Ackman, 09.28.04, 9:40 AM ET NEW YORK - Comcast says it wants to divorce itself from Time Warner, and it may do so by getting in bed with Time Warner so together they can buy Adelphia. That's the upshot of an official announcement made by the two companies and off-the-record statements made by their executives. The result--still well down the road--would be the two cable giants controlling more cable systems and perhaps more programming companies as well. How these transactions will play out between the companies and with regulators is still anyone's guess, but it's a tangled web right from the start. The official news is that Time Warner (nyse: TWX - news - people ), which owns the second largest cable system in the U.S., and Comcast (nasdaq: CMCSA - news - people ), which owns the largest, have agreed that Comcast will reduce its effective overall interest in Time Warner Cable from approximately 21% to 17% in exchange for stock of another that will hold cable systems and cash. Comcast wound up owning a piece of Time Warner's cable business when it bought AT&T Broadband. AT&T Broadband had owned 27.6% of Time Warner Entertainment, which then included cable systems as well as Warner Brothers, HBO, the WB Network and Comedy Central. The idea was that Comcast would gradually divest itself from the entertainment-producing companies. To that end, last year Comcast swapped its stake in Time Warner Entertainment for 21% of Time Warner Cable, plus cash and stock in Time Warner, the parent company. The agreement announced yesterday continues in that direction as Comcast will reduce its stake in Time Warner Cable. In return, Comcast will get shares in another company that also owns cable systems, plus $750 million in cash. Apparently, there are tax advantages for Comcast. The unofficial news is that Comcast and Time Warner are exploring a joint bid for Adelphia Communications (otc: ADELQ - news - people ), the bankrupt and scandal-plagued cable company that is fifth largest in the U.S. So while Comcast and Time Warner are moving apart on one hand, they are, on the other hand, moving back together. If they buy Adelphia, the cable industry would be consolidated among even fewer owners. All or nearly all cable systems have monopolies at the local level--despite the fact that there is some competition in theory from satellite TV providers. But the fear is that as cable companies grow, they will gain increased power over programming at the national or international level. Comcast itself has made several recent moves in that direction. It tried to buy Walt Disney Company (nyse: DIS - news - people ). That deal looks abandoned, but with Disney's Michael Eisner on the way out, that company is in the throes of succession issues, and who is to say it will not revive. Meanwhile, Comcast joined a consortium led by Sony (nyse: SNE - news - people ), which owns Columbia Pictures and its library of programs, to buy Metro Goldwyn Mayer (nyse: MGM - news - people ), a smaller movie studio that is barren of new ideas, but which also controls a massive library of old movies (see: "MGM, Sqeaking Lion"). The second-place bidder in that deal was Time Warner, but apparently there are no hard feelings among media moguls. The scuttlebutt is that Time Warner and Comcast would each be interested in those Adelphia cable systems that are near systems that each one owns already. Comcast may, for instance, want to join the systems it owns in Los Angeles with systems now owned by Adelphia in other parts of town. But the result could be that the two giants own even more of the distribution systems, giving them more control over programmers, whose content they purchase. Time Warner, of course, already owns a lot of content. Comcast owns less, but with the Sony-MGM deal, it is beefing up on that end as well. The irony is that old media-ownership regulations were said, rightly, to be out of date partly because broadcast networks were already facing competition from cable networks. Those regulations have been thrown into disarray by court rulings and Congressional action (see: "Everybody Hates The FCC"). But now, Comcast is in an apparent partnership with Sony, a major entertainment programmer, and with Time Warner, a programmer and cable operator. While one shouldn't overestimate the extent to which Comcast cares what people watch, so long as they watch it through Comcast, the situation should at least give pause. Announcing the Comcast partial divestiture deal, Time Warner CEO Richard Parsons issued a statement: "Today's announcement is another example of our working closely with Comcast to reach a mutually beneficial outcome to the business matters facing our companies." Well, isn't that special. ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.
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