Cable Operators

Cable Execs: Increasing Scale Not a Necessity

5/03/2004 11:29 AM Eastern

New Orleans -- Three top cable-company chiefs continued to express desire for increased scale at the opening general session at the National Show here Monday.

But with continued growth for new services, another major acquisition is not a necessity.

Since Adelphia Communications Corp. said last month that it would pursue a sale in conjunction with its plan to emerge from bankruptcy, speculation has been rampant that a bidding war could erupt for its 5.4 million subscribers.

Comcast Corp. CEO Brian Roberts dodged the Adelphia question but stressed his company’s love for cable. Comcast reported 21% cash-flow growth in the first quarter. But he appeared to rule out trying again to buy The Walt Disney Co.

“It’s time to move on and get back to focus on cable and tell investors why the cable industry is better positioned than it’s ever been,” Roberts said.

“At the time [of the Disney bid], we were criticized for not making grander projections of where the synergy was,” he added. “There is a limited amount and there is an opportunity to perhaps improve operations at both companies. I think what happened, the opportunity was not a necessity to build new assets and improve the assets that were there. But can we rent those assets? … I think we can. Hopefully, we’ll build those assets, whether it’s stand-alone Comcast or in partnerships with others.”

Time Warner Inc. chairman and CEO Richard Parsons reiterated his desire to build his cable footprint, but only at the right time and the right price.

“We are all engaged in a business that is maturing,” Parsons said. “But cable is the one business that can look for double-digit top-line growth.”

Even Charter Communications Inc. chairman Paul Allen suggested that his debt-heavy MSO could get involved in consolidation. “There are obviously opportunities, whether it’s partnering or whatever options are out there,” he said. “I think that scale is something that all operators look at very seriously.”

With $19 billion in debt, it’s doubtful that Charter could make a large acquisition. But Allen said the company has begun to address the debt issue.

“In the past 18 months, we’ve put a lot of effort into addressing our different business issues. There were challenges -- we just got through a major bank financing,” Allen said. “I think the company is much better positioned for the future now.”

Parsons indicated that in the wake of major acquisitions that didn’t work out as expected -- notably Time Warner’s failed merger with America Online Inc. -- MSOs might have to wait a bit before the next mega-deal.

“Not only did we put our company in the penalty box, we put everybody in the penalty box with our last big deal,” Parsons said. “We’re going to have to go through a period where the street settles down and gets comfortable again with the direction things are moving and starts to have a little more faith in current management.”

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