Desperate, white-hot M&A talk trumps idle chatter over skinny bundles, OTT at INTX

Daniel Frankel, FierceCable editorLast week, platforms like mine breathlessly reported that Charter's (NASDAQ: CHTR) Tom Rutledge and Time Warner Cable's (NYSE: TWC) Rob Marcus were going to get together this week to talk merger. As they sat right next to each other on an INTX general session panel here Wednesday morning, it became quite clear that cable's still-pending wave of consolidation is more complicated than when Charter buys TWC and how much it pays for it.

Indeed, with Rutledge and Marcus also sitting next to the M&A world's loose cannon, Cablevision's (NYSE: CVC) James Dolan, as well as Cox's Patrick Esser and Liberty Global's Mike Fries--as well as the biggest elephant you've ever seen--buzz about cable's next big mega-deal quickly usurped OTT, skinny bundles and other compelling topics of the day these titans were also asked about.

In fact, when we are finally able to answer to question, "What happens now that Comcast has walked away from TWC besides Comcast 'moving on'?" we'll look back at this panel, which was far and away the most interesting thing that happened at the NCTA's re-branded Cable Show this year. 

Thank Dolan for that.

In case you missed seeing it or reading about it, minutes after Marcus told panel moderator Julia Boorstin that he wouldn't talk M&A, Dolan said it would be a great time to consolidate the New York cable TV market.

"I think I'm proposing communing," he said, when asked by Boorstin if he was suggesting a merger. Would that be with the company it's been fiercely competing with in the New York market, Verizon (NYSE: VZ)? he was asked next. "No." Would that be with TWC? Affirmative. 

Marcus joked that "I am not sure if I got asked out on a date or to get married," but executives at other cable companies I spoke to didn't think Dolan was joking. 

What started out as a rather simple proposition--if Comcast can't get TWC, then Charter does--now seems way more complicated. Add Cablevision to the Charter/TWC/Bright House puzzle.

While Cablevision bangs the messaging drum of being focused on "connectivity," an executive at a smaller cable operator described Dolan's move as a somewhat "desperate" gambit to get help in a bloody war with Verizon FiOS, which remains heavily entrenched in Cablevision's footprint and, on the video services side, keeps eating away at subscribers and margin. 

"They can talk about connectivity all they want, FiOS is eating their lunch," the exec said.

That assessment, of course, comes from a man competing in cable's big M&A chess match with Cablevision. But media analyst Craig Moffett, also speaking on an INTX panel Wednesday, called selling his company Dolan's "only realistic option."

Whether a deal is realistic or not is another story, he said, given Cablevision's shares have risen 23 percent, and the company now has a "sky high" market capitalization of $5.61 billion. 

"Consolidating New York makes a good sound bite, but it is very hard to envision any other cable operator wanting to increase their exposure to Verizon FiOS to the extent that would come with Cablevision," Moffett said. 

"TWC management has been very skeptical about why a deal for the fully penetrated + bleeding subscribers Cablevision makes any sense, and Cablevision stock appears to be clearly trading at a takeover premium," Pivotal Research Group CEO and media & communications senior analyst Jeff Wlodarczak wrote.

Whether Dolan's indiscreet messaging helped Cablevision's cause is debatable, since his company's stock spiked another 7 percent Wednesday after his remarks. 

Regardless, the comments at least made the NCTA's latest confab far more memorable.--Daniel