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NEW BRUNSWICK, NJ–A $17.7 billion deal to sell Cablevision, the state’s second largest cable provider, may change service options and pricing for Hub City residents if the proposed transaction closes in the first half of next year.
The sale, if approved, will make Altice, a French telecommunications company, the fourth largest cable operator in the U.S. serving a total of 4.6 million customers in 19 states plus NJ.
Cablevision had 893,885 customers in the Garden State as of 2013, but its video business is reportedly shrinking as customers switch to online streaming of content, a trend hurting other pay-TV operators as well.
Most New Brunswick residents use Cablevision, and its “Optimum” brand of television and internet service. Cablevision also owns and runs its own “News 12” news channels, including one based in Edison.
Cablevision serves 3.1 million cable, voice and Internet customers in New Jersey, New York, and Connecticut. However, the company reported that its total number of cable TV subscribers decreased by 16,000 during the last three months, while its total internet customer base rose by 14,000 during the same period.
The bid for Cablevision demonstrates that Altice is dedicated to becoming a serious player in the U.S.
Eighty-six percent, or 2,693,580, of New Jersey households subscribe to cable television, and 438,850 have TV but are without cable, according to The Neilson Company’s, Television & Cable Factbook 2015.
New Jersey ranks number one in the “Cable Universe by State,” according to the book.
Altice also agreed to buy Suddenlink Communication earlier this year for $9.1 billion. Combined with Suddenlink’s 1.5 million customers, Altice will be the fourth-largest cable operator in the United States.
Altice is likely to leverage its size when it negotiates fees and digital content rights with U.S. networks, in the future, if it aquires Cablevision.
“How will Altice’s growth affect the U.S. market?” asked Victor Luckerson on time.com.
“As the biggest cable and Internet operator not based in the U.S., Altice may be able to bring some European flavor to American shores. Across the pond the company has had success selling a ‘quadruple play,’ which is a bundle of television, high-speed Internet, landline phone service and wireless phone service,” says the Time report.
“My vision is to do the same in the U.S., but bigger,” billionaire investor, controlling shareholder, and Founder of Altice, Patrick Drahi told the Wall Street Journal last summer.
Mike Paxton, senior analyst at SNL Kagan said that customers can’t expect Cablevision to offer “service on the cheap,” according to a report by David P. Willis on app.com.
Citing a competitive market with options including Verizon FiOS and satellite TV widely available depending on the town, Paxton was quoted as saying: “Not only do they (customers) expect choices, but they expect a certain level of services. Altice is not going to have a lot of room to maneuver when it comes to changing the way things are done, particularly over the short term.”
Emphasis on broadband services – defined as wireless technologies using longer-range directional equipment to transmit a wide band of frequencies, will continue under the new ownership.
Asked if Altice would “sort of double down on” Cablevisions bundling of services that focus on using high-speed internet access to stream video and audio content, Paxton told the Asbury Park Press that it was the “right strategic move,” to focus on the streaming, adding that he “would tend to think they’re going to spend some time to familiarize themselves more with the market. …The broadband part of the bundle is really Cablevision’s strength.”
Altice is known as an aggressive player in France’s competitive market where, like the U.S., there is a high need for video services. In May, the company invested $9.1 billion so that it would own enough of Suddenlink, a small U.S. company, to control it.
According to the app.com report, Altice could take advantage of a mature less-regulated U.S. market where “consumers spend more.” The European company will have the freedom to do business with competitive telecommunications, satellite and cable providers.
“They are a little bit freer to experiment with new business models,” Paxton told app.com.
“One of Cablevision’s advantages is they serve a premium media market — New York City. I think Altice is probably confident they could take out a lot of cost synergies, which we estimate is $350 million plus,” Amy Yong, an analyst at Macquarie Group said recently.
“Despite the industry challenges triggered by cord-cutting and the TV revolution, broadband Internet growth remains strong as more consumers access all types of content over digital platforms,” reads the app.com report.
“[The companies] modus operandi is to dramatically downsize and try to use technology in place of people,” said cable and satellite sector analyst, Craig Moffett on Bloomberg radio.
According to Drahi, all the cable companies, including Cablevision, will lose nearly 25 percent of their television subscribers over the next five years.
Moffett predicts an “aggressive” increase in broadband prices will follow.
Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.