Fallout: Sprint Dumps MetroPCS Bid

Late last week, reports suggested that Sprint was narrowing in on a deal to buy MetroPCS but backed out at the last minute. While the talks have undoubtedly come to a halt, analysts say the wireless industry will be unable to avoid some kind of consolidation going forward.

According to Citi's Michael Rollins, Sprint's failed bid for Metro is "only the beginning for a new phase of industry consolidation given the demands for carriers to build spectrum scale to accelerate the deployment and migration to faster 4G services." And, the analyst said, the over-arching theme that has emerged in the wireless space is that spectrum is simply "in the wrong hands."

Bernstein Research's Craig Moffett agrees, saying the developments serve as a reminder that the wireless industry is "crying out" for consolidation. "A combo of Sprint and MetroPCS would have been a logical one... but both are also spectrum constrained, and the combination would not have addressed either's need."

Moffett said the logic driving consolidation is clear as only Verizon Wireless and AT&T are earning their cost of capital. "Fragmentation undermines industry returns by pushing down prices and pushing up spectrum values," he said. "Smaller players will need to bulk up."

The problem, however, is that 1) regulation and anti-trust concerns block consolidation from the top (e.g. AT&T and T-Mobile); 2) technology and anti-trust concerns block consolidation from across the middle (e.g. Sprint and T-Mobile); and 3) financial constraints block consolidation at the bottom (Sprint and MetroPCS).

"Sprint's ability to play the consolidator role is highly uncertain, at least any time soon," the analyst said. With or without a deal, MetroPCS (and other smaller companies) will "remain viable targets for larger carriers." •

Study: Pay-TV v. Internet Video

Last year, VOD revenues from pay-TV providers reached $1.3B as 15% of subscribers used the service at least once in 2011. According to new research from The NPD Group, 40M pay-TV subscribers older than 13-years-old used some kind of VOD service during the year.

However, revenue from internet-delivered VOD increased to $204M last year. And, the research firm says, offerings from Hulu, iTunes, and many others, tallied more than 7M users by mid 2011. NPD says 16% of all paid VOD movie rental transactions originated from an internet source.

NPD SVP Russ Crupnick says the numbers show that consumers are often choosing internet-delivered video services over those offered from pay-TV. The firm's latest study shows that iVOD users lessened the amount of time they spent watching linear TV by 12% during the test period (Aug. 2010 - Aug. 2011).

"Cable companies need to improve the user experience," the analyst said. "With this new competition eating away at revenues, pay-TV operators need to be equally aggressive..." •

Etc.: Analyst: Cord-cutting Still An Issue - Charter Posts Q4 - TWC Tests Usage-Based Billing in TX

Analyze This: Despite improved subscriber trends for most pay-TV operators in Q4, Credit Suisse analyst Stefan Anninger says cable still has "a long way to go before we can say that cord-cutting is a non-issue." THR has the story.

QRs: Charter reported total customer adds of 8,700 during its Q4 (compared to a loss of 35,700 in Q410). The company said its residential video customers decreased by 45K (a 27% improvement compared to the 62K decrease in Q410), added 67,700 internet subs and increased its overall ARPU 8% y/y to $140.69. Charter posted Q4 revenue of $1.83B, up 2.6% on a pro forma basis and 2.8% on an actual basis compared to the year-ago quarter. Video revenues totaled $892 million, a decrease of 2.5%, "as a result of video customer losses, partially offset by growth in revenues from DVR and high-definition television services." --- The Washington Post Co. reported net income of $116.2M ( $14.70 per share) during its Q4. The company's Cable One business posted a loss of 6,237 video subs during the period, but gained ~3K internet (and ~3,400 phone) customers. Cable One generated $190M in Q4 revenue, down a bit from $191.3M in Q3.

Strategy: Time Warner Cable is trying out a usage-based billing strategy again... this time as an optional plan for customers to save some money. The company is offering tiered packages that reward customers with $5/ monthly discount if they stay under 5 Gb of usage. Exceed the 5Gb limit and subs could pay up to $25 extra per month. The 'Essentials Broadband' program is being offered in select regions in Texas.

Deals: Netflix is said to be in talks with Univision for Spanish-language programming. Citing people close to the matter, Bloomberg says the deal will include programs from Grupo Televisa SAB, the world's largest Spanish broadcaster. --- The WSJ says Sprint's decision to abandon plans to buy MetroPCS "shows the tight constraints... that the wireless carrier (is) operating under at a tumultuous time in the U.S. telecom industry." Read more. --- Discovery and CBS have emerged as potential buyers of TV Guide Network. --- Entropic said it won a bid to acquire Trident Microsystems' STB system-on-a-chip (SoC) assets for $65M ($10M more than its original offer). The deal must now be approved by the U.S. Bankruptcy Court for the District of Delaware.

In Court: An appeals court issued a ruling last week in the Gulf Power Co. v FCC case that denied the company's charge that the federal statutory rental rate for cable attachments to utility poles fails to provide "just compensation." Details here.

Research: More from the 'throttling' conversation... A new study suggests data usage on tiered plans and on unlimited plans was basically the same. --- Forrester says Americans will spend as much as $327B online by 2016, nearly 9% of all retail sales. --- Nielsen says women account for 64% of all online viewing of content on Netflix and Hulu. --- New NPD In-Stat research forecasts that nearly 23M wireless HD video-enabled devices will ship in 2015.

Data: Social TV tracker Bluefin Labs counted 3.44M "social comments" about Sunday night's Academy Awards. The metric is much smaller than two other big live TV events this month: 12M comments for the Super Bowl, and 13M for the Grammy Awards.

Advertising: Ad Age says YouTube is asking as much as $62M for exclusive ad packages on a group of its "premium channels." Read about YouTube's "audacious TV-like ambition." --- AdWeek has an informative series on how marketers are creating campaigns that speak to women 'as they really are... rather than speaking down to them.' Check it out. --- The Cabletelevision Advertising Bureau said national cable ad sales increased by 7.8% to $22.1B in 2011.

Programming: The UFC signed a deal with FOX Sports Media Group to air two 13-week seasons of "The Ultimate Fighter Live" on FX annually for seven years. The show will feature live bouts every week as opposed to previous seasons of the show that were pre-recorded months in advance. The new show begins Friday, March 9 at 9pm ET with a special 2.5 hour live premiere. --- International Media Distribution said it is changing the name of STAR One to Life OK with new family entertainment programming from India. --- Corus Entertainment's newest service, ABC Spark, launches on March 26 with the day-and-date season premiere of "The Secret Life of the American Teenager." The primetime schedule will also include ABC Family original series "Switched at Birth," "Melissa & Joey," "The Lying Game," and "Make It or Break It."

Tech: Adobe is developing a new online video platform called Project Primetime. The technology is designed to enable seamless viewing (comparable to TV), combining premium video and advertising across all major platforms including iOS, Android, Windows, Samsung smart-TVs and other devices. Adobe is also supporting the MPEG-DASH initiative instead of using Flash. Details here. --- As cable shifts to a service-oriented architecture, the future of TV-as-connected platform lies in the cloud. This piece at Cable360 says two challenges are preventing cable operators from advancing in the cloud: delivery techniques and bundled offerings. --- Rogue Paper said it is extending its second-screen TV platform TV Tune-In to desktop computers and Android devices. Details here. --- RIM's Blackberry PlayBook tablet will feature a "Video Store" movie service powered by Rovi Entertainment. --- MobiTV is working with Texas Instruments on an HD content streaming platform.

SkyREPORT: Thrane & Thrane said it received an unsolicited approach from an unnamed 3rd party expressing interest in acquiring a majority share of the company. T&T's board voted to review the offer to see if it best serves shareholders. --- Hughes Network Systems released the HX System 4.0 featuring a dual stack IPv6/IPv4 design, HX90 satellite broadband router, WGS support and more. Details here. --- Intelsat signed a deal with Etisalat UAE for capacity on Intelsat 22, scheduled to launch in late March 2012. As part of the multi-transponder agreement, Abu Dhabi-based Etisalat will utilize the satellite's capacity to expand the reach of its broadband and GSM backhaul services to customers in the Middle East, Africa, Europe and central Asia.

Retail: AT&T held a grand opening event Monday for its new bilingual wireless store in Elmhurst, NY. --- Sprint opened a new retail store Atlanta.

Over, Up & Under There: Internet service is down in East Africa as a ship waiting to port dropped its anchor on an underwater fiber optic cable off the coast of Kenya. BBC has details.

Misc.: ICAP is auctioning off a patent portfolio from Maggio Media Research related to the delivery of data from cable STBs. Info here. --- American Roamer officially changed its name to Mosaik Solutions to better reflect the company's growing capabilities beyond mobile and roaming data.

Letters to the Editor: (re: Monday's Maxwell): ...It is true that data is the "plastics" of yesteryear, but missing in your points are, "Who's data is it?"  And what about the consumer who typically is what the data is about. And how was that data obtained? And how can the data about the consumer be managed and controlled by them and not be traded willy-nilly for others to profit? Our research has indicated that consumers ARE concerned about all this. So the element of privacy, ownership, security and control loom very large in this space and, in my opinion, should not be ignored. But that is part of the plastics opportunity as well for entrepreneurs to solve. And may the market forces be with us and not regulatory in addressing these issues. -Jim Rice

• (re: Friday's SkyBOX): I am tired of the forced bundling and sports 'taxation'...not to mention the bi-annual greed wars. I also find the limited access to many cable and premium networks to be grossly outdated in today's electronic landscape. I'm sure VOD works well for some subs in the pay-tv world, but how about something akin to cloud-based DVRs for us TV-holic fringe dwellers? Or even multi-channel DVRs built into new TVs? We are a 'shift worker' household. We don't get to watch prime-time shows live, and it has taken me some time and effort to get the multiple 750GB DVR units set up that we use now. Cord-cutting for us is as yet a dream. BUT, if the politicos in this industry would wake up to what really needs to be addressed, instead of just trying to defend their own little fiefdom, maybe we could all get to enjoy some television democracy soon! -Brad Giles

• (re: 'Gen C'): "Nielsen has dubbed our youth born after 1990 the 'connected' generation..." In my opinion, a better way to say it would be 'tethered' by being constantly 'connected.' However, that would not play in a marketing sense. -Bob Block

--- Catch today's media market news in The Evening BRIDGE. •