Look Out, Netflix: Cable Pioneer Is Looking for a Fight
By Josh Wolonick Oct 10, 2013 4:32 pm
Plus, FiOS may not meet its NYC obligations, and two BlackBerry co-founders look into buying back the company.
Cable Pioneer Says Cable Companies Should Team Up to Create Netflix Rival
John Malone, Chairman of Liberty Media Corp (NASDAQ:LMCA) and former CEO of the 1970s and 1980s cable and media giant Tele-Communications, wants the cable industry to cooperate and create an online streaming product to compete with Netflix (NASDAQ:NFLX).
At Liberty Media's annual investor conference, Malone advocated for cable companies to acquire content for one Internet streaming service that all cable companies could, in turn, sell as a bundle with broadband. He said that this would "solve the problem" of high programming costs, a problem that Netflix overcame by growing big enough to buy exclusive content at good prices, which the cable industry has itself struggled to do.
For an example, he referred to Comcast's (NASDAQ:CMCSA) Xfinity product. It packages high-speed Wi-Fi and streamable content, and could be shared with competitors in the cable industry to create a national brand. Additionally, Malone argued that this kind of cooperation would help the cable industry take back market share from satellite and telecom competitors.
As he said, "The cable industry has been very slow... which has created opportunity for the over-the-top guys."
Ahead of Deadline, Verizon's New Fiber Internet Still Unavailable to Many New Yorkers
In 2008, Verizon (NYSE:VZ) signed a franchise agreement with New York City's Department of Information Technology and Telecommunications (DOITT), in which the telecom company agreed to install high-speed fiber and make its FIOS service available to every single resident of the city by the summer of 2014. At the time, this contract was applauded by New Yorkers, as it would finally bring a competitor to the ubiquitous, and often inefficient, Time Warner Cable (NYSE:TWC).
However, five years after Verizon swore to bring high-speed Internet to all, the FiOS service has large holes in its availability, sometimes skipping floors, buildings, or entire blocks with seemingly no rhyme or reason. Verizon has said that holes in coverage are the result of unaccommodating landlords.
According to a study run by public advocate and Democratic Mayoral hopeful Bill de Blasio, only 51% of NYC households have Verizon fiber Internet access, thought both the city and Verizon have contested these numbers. (Verizon claims that a full 75% of the city has full access to its high-speed service.)
Moreover, Verizon has said that once it reaches its obligation stipulated in the 2008 agreement with the NYC DOITT, it has no plans to continue developing the FiOS network in New York or beyond. This statement has been used to defend its partnership with Comcast, whereby the companies sell each others' products -- a partnership that is often criticized as being collusive.
It is likely that Verizon will spend more of its time, money, and energy on developing its wireless business, which offers 4G service that can be used as Internet broadband. Moreover, because of strong returns for the wireless business on the company's latest earnings, analyst firms have encouraged Verizon to abandon its land lines and the entire FiOS project so it can focus better on the more lucrative wireless service.
BlackBerry Co-Founders May Buy the Company
According to a securities filing from earlier today, Mike Lazaridis and Douglas Fregin, co-founders of the troubled BlackBerry (NASDAQ:BBRY), have engaged with Goldman Sachs (NYSE:GS) and Centerview Partners to get assistance with a strategic review of their options. According to the SEC filing, the two are "interested in pursuing a joint bid" with "the goal of stabilizing and ultimately reinventing the company." Together, the two co-founders own about 8% of the company's stock.
Fairfax Financial (OTCMKTS:FRFHF), the company's majority stockholder, has already made an offer of $9 per share for a conditional takeover bid, valuing the company at $4.7 billion.
Follow me on Twitter: @JoshWolonick and @Minyanville
Minyanville Studios, a division of Minyanville Media, has a business relationship with BlackBerry.
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