Telcos fall into the trap of seeing other telcos as rivals in the provision of TV services.
However, in the view of Cyrus Mewawalla, head of thematic research at GlobalData, their main competitors are Big Tech and they should instead work together by creating consortia to share content. Such a move would be unlikely to be opposed by the EC as it wants national champions in Europe.
Mewawalla was speaking in a keynote discussion entitled Are telcos losing interest in TV? at the latest Media Meet & Greet, organised by Broadcast Projects in association with Broadband TV News. The session was particularly timely, given that Altice’s acquisition of a stake in BT was announced only hours earlier. Commenting on another major and recently announced deal, David Short, media technologist at Malkani Systems, pointed out that AT&T have sold WarnerMedia for significantly less than they paid for it. This suggests they couldn’t manage the company. Cisco’s acquisition of NDS a few years ago was also an example of a player from outside coming into the TV business and subsequently taking a big loss, and the feeling is there is a cultural mismatch between telcos and TV.
Looking at other examples of telcos entering the TV market, one could argue that Comcast’s ownership of NBCUniversal, with the latter managed at a distance, is the exception that proves the rule.
Mewawalla indicated that telcos currently account for only 6% of the TV business. In the case of BT, it has not been successful in this sector and, given that its shares are currently cheap, Altice has found itself with a good opportunity.
Mewawalla also said that the industry is changing very fast and we are likely to see a lot of M&As in the broadcast sector in the face of the Big Tech challenge. Short added while all these things require scale, it makes sense for smaller players to amalgamate.
Anette Schaeffer, analyst at Big Picture, recalled how Telefónica acquired content early on to differentiate itself from the competition. It was initially successful because it was one of the first telcos to do so and the size of the market it operated in.
However, when it comes to producing content telcos have never really invested in acquiring the knowledge this requires.
According to Mewawalla, when telcos, especially in Europe, went into TV it was essentially as a local business. Now they find themselves competing in a global market and few can buy content on such a scale. TV is, in fact, an expensive hobby and they don’t invest enough, only dabble.
It was quite telling that when the moderator Julian Clover, editorial director at Broadband TV News, asked the panellists if they could think of any telco content success stories, only two came to mind: PCCW in Hong Kong, which according to Schaeffer were quite successful, and, as Short recalled, a company in Milan some 20 years ago.
Significantly, Mewawalla also made a strong argument against net neutrality. Supported by regulators, it effectively sees telcos subsidising the world’s biggest streaming companies and is certainly not a commercial level playing field.
When asked by the delegate Tigist Kebebe what advice the panellists give to emerging markets in Africa and Asia, Short said they can skip certain technologies that were previously used in more developed ones, while Mewawalla suggested they avoid net neutrality. Schaeffer gave the example of MultiChoice, which is well adjusted to all the developing markets it operates in.
Justin Hewelt, another delegate, made the point that Italy’s TIM currently appears to be more interested in TV than most other telcos. Through its TIM Vision box and bundle deals with Disney, Netflix and DAZN, it has managed to stem fixed-line subscriber loss.
