European telecom operator Altice made a deal last week to buy Cablevision, a New York based-cable company. It marks the company’s second foray into the U.S. market, after its announcement in May that it was buying St. Louis-based Suddenlink. And it’s one more tie-up in a wave of consolidation that is sweeping the U.S., which in recent months has seen Charter agree to merge with Time Warner Cable and AT&T buy DirecTV.
Here’s a look at what’s behind the trend and what it means for consumers.
Q: Why are these deals happening?
A: Online video providers such as Netflix and Hulu are taking a toll on traditional satellite and cable TV providers, capping their growth and leading some customers to cut or shave their pay TV plans, even as they pay more to carry TV channels in their lineups. So cable and satellite companies are teaming up to trim costs, re-invest in their profitable broadband Internet networks, and create new bundles such as ones that marry mobile phone service to your home Internet connection and video service.
Q: What is Altice’s plan?
A: By joining Cablevision’s 2.6 million video customers with Suddenlink’s 1.1 million, Altice is creating the fourth-largest cable video provider in the U.S., behind Cox with 3.9 million. It plans to save about $1.05 billion in annual costs over the next three to five years in part through bulk purchases of set-top boxes and modems, by eliminating overlapping corporate functions, and improving and simplifying its network.
Q: Will there be further consolidation?
A: Yes. Altice CEO Dexter Goei said the company looks to continue to expand in the United States. Even if big players such as Charter and Time Warner Cable are spoken for, there are several smaller cable operators it could possibly make a play for, including Cox, Mediacom, Wow! and Cable One.
