Last Monday, a blustery day in March, Comcast Corp. bowledover plenty of folks in this industry with its announcement that it was buying a biggerMSO than itself, MediaOne Group Inc., for about $60 billion in stock and assumed debt.
For an industry that was still digesting the ramificationsof AT&T's earlier acquisition of Tele-Communications Inc., this new deal had justabout everyone predicting, "You ain't seen nothing yet," as one executivesuccinctly summed up what many others were echoing.
Already, industry executives are predicting that one of theoutcomes of Comcast's acquisition of MediaOne is that AT&T will become moreaggressive and acquire more cable companies, prompted in large part by Comcast'songoing shopping spree, which most people think is pretty much over with now.
And with cable companies' stocks on the rise, andbuyers like Paul Allen still shopping, folks were wondering how long it would be beforeother large MSOs -- namely, Cablevision Systems or Cox Communications -- would make thenext wave of merger-and-acquisition headlines.
Even Adelphia's John Rigas, the"consolidator," could do another deal.
For some industry veterans, last week's news of theComcast/MediaOne deal was also seen as a "vindication," if you will, that thetraditional cable companies are here to stay, and that you don't have to be owned byor joint-ventured with a telephone company to duke it out successfully.
"Comcast has proven that it intends to be a long-termplayer with this deal," said one executive, who did not want to be identified.
Still, not everyone is going to have a role to play in thisnewly created mega-MSO.
While there are many benefits to industry consolidation --where huge geographic clusters create mega-power forces that can more efficiently delivernew services -- there is a downside, and that is another inevitable downsizing ofcable's rank and file.
And with fewer doors to knock on as consolidationcontinues, many people who had made their careers in cable may find that the industry thatthey helped to build no longer has any need for their skills.
Following the news of Comcast's acquisition ofMediaOne, people couldn't help but make comparisons with what happened at JonesIntercable when Comcast acquired that Englewood, Colo.-based MSO.
The toll was particularly hard at Jones, where 200 out of300 employees at corporate headquarters lost their jobs as a result of the deal.
And although the Comcast/MediaOne deal is far from closing,with many issues left to resolve, the writing is already on the wall that there will besome shedding of blood.
As our Denver-based senior editor, Joe Estrella, reportsthis week on page one, Comcast president Brian Roberts plans to reduce the estimated34,000 employees in the combined company by 5 percent, or about 1,700 people.
And although no one knows for sure, it looks like the bruntof that ax will be felt at MediaOne, which has 1,100 workers in the state of Colorado,compared with 200 corporate employees at Comcast's Philadelphia headquarters.
But the pain will likely mushroom beyond corporateheadquarters in this case and to the system level, where MediaOne, which had beencentralizing its operations, had not yet eliminated redundant positions in the field.
And when you look at the merged company and theredundancies in the regions with contiguous cable operations -- 55 percent of MediaOnesubscribers are within Comcast DMAs -- need we say more?
As pointed and as heartless as it may sound, MediaOnespokesman Steve Lang is dead right when he says, "You've got to ask yourself:How many regional management teams do you need in the Northeast?"