Analysis: Altice to Become One of Five Groups Controlling Half the World’s Pay TV

LONDON: Half of consumer spending on pay TV globally now goes to just five groups of companies, with Altice set to be among them, according to Ampere Analysis. 

Pending final approval on its Cablevision acquisition, Altice joins the largest global pay-TV players that control close to 50 percent of the world’s subscription TV revenue. Altice will account for 3.1 percent of global pay-TV revenue exactly.

Guy Bisson, research director at Ampere, said: “Unlike the four largest players, what’s missing in Altice’s current strategy is a focus—by region or platform. One option for Altice in the U.S. 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 U.S. as it is Europe. This would not be cheap. Vodafone sold its stake in U.S.-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.” 

Ampere explored just how much consolidation is impacting pay TV. The merger between AT&T and DirecTV earlier this year created the largest pay-TV operator in the U.S., overtaking long-time leader Comcast (which has 9.3 percent). At 18 percent, this group also leads the way in global pay-TV revenue. In second place, at 9.5 percent of the global pay-TV market, are the entities controlled directly and indirectly by John Malone. This includes Liberty Global assets and the potential addition of Charter, Time Warner Cable and Bright House (assuming the impending merger closes). Consolidation is also happening across Europe. The most significant activity recently was the creation of Sky Europe, which is now the largest pay-TV broadcaster in the region, with 27.8 percent of Western European pay-TV revenue. 

The research firm also asserts that cord-cutting is pushing pay-TV operators to look to new territories. Pay-TV operators have enjoyed nearly three decades of strong growth, but now consumers in the core Western markets in particular are defecting. Cord-cutting 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—marking the lowest figure for more than ten years. Slow subscriber growth in these regions will weaken future prospects beyond more consolidation, so it’s vital that operators look to new markets, Ampere said.

Report author 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 & 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.”