Altice to become one of five controlling half the world s pay-TV

Altice has seen a meteoric rise in the past 18 months, transitioning from a private equity firm with a diverse range of smaller stakes to a multinational TV and communications company. It now joins the largest global pay-TV players who control close to 50 per cent of the world's subscription TV revenue, according to a new report by Ampere Analysis.

Until 18 months ago industry veterans John Malone and Rupert Murdoch where the two major pay-TV figureheads, with US giant Comcast also registering a significant portion of global pay TV revenue at 9.3 per cent. But now there are two new players: AT&T with a staggering 18 per cent (following its acquisition of DirecTV), and Altice with just over three per cent pending the completion of its now-financed Cablevision bid.

Half of consumer spending on pay-TV globally now goes into the accounts of just five groups of companies, Ampere Analysis has found. Entities owned directly or indirectly by Malone will have almost ten cent of global pay-TV revenue if the merger of Charter, Time Warner Cable and Bright House is finalised, while Murdoch's stakes in Sky Europe and Foxtel take his global share to seven per cent. Five entities controlling one half of the pay-TV market means challenging negotiations for the supply chain, however, they also face the risk of viewers bypassing intermediaries and accessing content directly, in new ways.

Beyond consolidation, the opportunity for growth in pay-TV revenues is geographical expansion and moving into emerging markets in Asia, Africa and the Middle East. To date, the top entities have been slow to move outside the west, but Ampere Analysis believes that is changing.

The merger between AT&T and DirecTV created the largest pay-TV group in the US, and also leads the way in global pay-TV revenue (Q2 2015). As well as further US consolidation, and access to new markets in central and South America, the merger of the two companies presents an important opportunity to offer a significant quad-play bundle to US consumers.

Consolidation tactics are also at play in Europe. The most significant activity recently was the creation of Sky Europe, now the largest pay-TV broadcaster in the region, with 27.8 per cent of western European pay-TV revenue. By comparison, rival Liberty Global has 12.5 per cent, despite similar subscriber numbers in western Europe.

It has taken $50 billion and an aggressive 18-month global expansion plan for private equity firm Altice to achieve its significant 3.1 per cent slice of global pay-TV revenues (Q2 2015). That includes the creation of Numericable-SFR in France, the purchase of Portugal's largest telecoms provider Portugal Telecom, and acquisitions of US cable providers Suddenlink and soon Cablevision.

However, Guy Bisson, research director at Ampere Analysis believes that unlike the four largest players, Altice's strategy lacks focus. One option for Altice in the US would be to merge the services of fixed line cable with internet services and wireless communications, as it did in Europe with Numericable-SFR. But to do this Altice would need to purchase a mobile operator to provide quad-play services an offering not as developed in the US as it is Europe. This would not be cheap. Vodafone sold its stake in US-based Verizon Wireless for $130 billion in 2014. Altice's $50 billion shopping bill looks similar to the early days of Liberty Global, which having bought numerous operations only later began to divest non-core assets and create a geographically co-joined footprint, he commented.

After almost three decades of strong growth for pay-TV operators, a cord-cutting' trend is beginning to emerge among consumers. Defection from the traditional pay-TV companies means that net additions of new subscribers have been in decline since 2011, and will reach just over 25.7 million worldwide this year, the lowest figure for over ten years. Slow subscriber growth in these regions will hamper future prospects beyond more consolidation, so it's vital that operators look to new markets.

Analyst Daniel Gadher explained: Beyond AT&T/DirecTV which has a significant presence in a number of countries in central and South America, and Liberty Global exploring the South American market (even more so should its mooted acquisition of Cable and Wireless Communications complete), there is very limited investment among these groups in emerging Asian, African and Middle Eastern markets. These geographies have considerable potential for expansion in the coming years and if the groups we identified are to maintain their dominance, expansion into these high growth markets will be crucial.

Although currently a minor part of its business, Altice has begun to recognise the opportunity in emerging markets. The group now has a small number of assets in central America and the Caribbean, and a stake in African communications group Wananchi (alongside Liberty Global).

www.ampereanalysis.com

LINK:	http://www.tvbeurope.com/altice-to-become-one-of-five-controlling-half...
	See more stories from tvb

Most recent headlines