Comcast’s $45 billion mega-deal for Time Warner Cable had both Main Street and Wall Street Thursday trying to figure out the implications for programmers and their projected piles of retransmission cash.
The combination of the No. 1 and No. 2 players in cable is almost certain to mean crushing carriage negotiations for those programmers — many of which boast higher stock prices based on pre-deal lofty expectations.
Comcast, which gets “Most Favored Nation” status as the largest cable operator — the cheapest and most favorable programming deals — will get to see TWC’s ime Warner Cable’s contracts and be able to ultimately renegotiate accordingly.
“The kimono is open,” said a big programmer. “There’s going to be a big shake-out, but it depends on how buttoned-up your deals are.”
That means CBS’s drawn out fight with TWC last year for better terms may have all been for naught if that deal gets replaced by Comcast contracts instead, one source said.
Insiders played down that prospect and CBS Corp. is sticking by its target of $2 billion in retransmission dollars by 2020.
The deal would have Comcast CEO Brian Roberts sitting atop 33 million subscribers and operating in 44 of the top media markets in the US.
Local station group owners’ bottom lines may also be hit by the deal.
A bigger Comcast would make it much harder to extricate the kind of retransmission dollars they’ve been bargaining for, much of which gets sent back to the networks.
“Comcast will be able to drive a much harder bargain, given that they’re in almost all of the top markets,” said one executive familiar with carriage agreements.
Comcast, which will gain control of TWC’s two Los Angeles sports channels carrying the Lakers and the Dodgers, may also decide to bid up local sports rights fees as it did in Houston to create more RSNs, one person suggested.
That could drive up fees for subscribers — a fear that was echoed both in LA and New York.
Richard Greenfield, industry analyst with BTIG, believes content owners still hold the advantage, but sees more consolidation ahead.