Although there is still scope for more cable market consolidation, the next phase of the process, involving M&As between cable and mobile companies, has already begun.
Speaking in a panel discussion on finance, Clif Marriott, MD, Goldman Sachs, said that this had already been demonstrated by deals such as the one between Vodafone and Kabel Deutschland and that the regulatory aspect was becoming a larger factor as companies in M&As become bigger.
Frank Knowles, principal, New Street Research, meanwhile said that while the first phase of consolidation – cable to cable – presented few difficulties as it is easy to integrate operators, the second, involving different businesses with different products was harder. It was also been undertaken less for financial and more for competitive reasons.
Guy Bisson, research director, television, IHS, pointed out that there are still many smaller deals among cable operators to be done, especially in Scandinavia and Central and Eastern Europe.
Content is also coming back to the fore, maybe around the OTT space. However, it will not take the form of M&As between content and cable companies, rather focus on content relations, mainly in the form of rights.
Marriott said that for him the question of content was a complicated one. Some companies, such as Liberty Global, have scale and can therefore do a lot with it. The key for cable operators is how to get their content to customers wherever they are and this involves trying to get content rights.
Looking at the current state of play of various financing models, Marriott said that in the case of debt financing yields are coming up and interest rates are rising. Liberty’s transactions over the last 12 months have been mostly financed by debt markets.
Public equity is meanwhile very good at backing cable companies, while private equity, though still enamoured to cable, will decelerate buying.
