Post-acquisition, opportunities for some Cable swaps (perhaps involving Comcast) ?

Tom Paine

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Now that Altice's acquisition of Cablevision and Charter's Time Warner Cable and Bright House purchases are done deals, it might be time for a little old-fashioned horse trading.

Its a cable industry tradition, when after some deals are completed company operatives get together and swap franchise areas in an effort to 'rationalize' the map. This usually involves mutual trading so that each participant adds geographically contiguous properties in order to enhance one's market concentration in a given area.

Since the industry has become more concentrated, there's less need for such trading. But the completion of these most recent acquisitions creates opportunities, in the New York Metro market and perhaps others. In New York Metro Cablevision and Charter (primarily through acquiring Time Warner Cable) are the dominant incumbents. And Comcast is a distant third, with North Jersey, Connecticut and Northeast Pennsylvania service areas. When Comcast was pursuing Time Warner Cable, these areas seemed like logical extensions to what would have been Comcast's New York footprint.

But now that opportunities for expansion there appear gone, those service areas seem like outliers (from any Comcast major media market) and it wouldn't surprise me if Comcast offered to trade them. I'm not sure what it would want in return, but generally speaking swaps are preferably to sales in terms of tax implications.

Such an asset swap would also rid Comcast of its YES Network problem. Comcast is not carrying the New York sports network, featuring the Yankees, because it says its too expensive. YES is blacked out in 900,000 Comcast households in New Jersey, New York and Pennsylvania.

FCC Connect to Compete Home Broadband Coverage Map (2010 Base Data)