Despite operating in few, if any, major US markets, Cable One is continuing to turn itself into one of the nation's biggest cable and broadband providers by scooping up smaller operators throughout the nation.
In the latest case, Cable One swung a deal to buy Fidelity Communications, a family-owned Tier 2 cableco, for $525.9 million last week. The purchase represents the latest in a recent spree of acquisitions by Phoenix-based Cable One, which just shelled out $735 million for NewWave Communications in 2017.
With Fidelity in hand, Cable One will solidify its position as the nation's seventh-biggest cable operator with more than 700,000 residential subscribers, most of them broadband-only. It will also pick up a good deal of ground up on both No. 6 MSO WideOpenWest and No. 5 Mediacom Communications, both of which have mainly been growing organically within their existing footprints.
And Cable One is probably not through with its acquisition binge. Speaking on the company's Q4 earnings call in February, Cable One SVP and CFO Steven Cochran indicated that the MSO would keep hunting for more cablecos to buy. "We'll look for opportunities for strategic fits," Cochran said at the time.
As a privately held company, Fidelity does not reveal much about its financial or operating performance. But the cable operator -- which serves about 114,000 residential customers in parts of Arkansas, Illinois, Louisiana, Missouri, Oklahoma and Texas -- has indicated that it's following the industry trend of focusing much more on broadband connectivity and shifting away from traditional pay-TV service.
Over the last few months, for instance, Fidelity has been furiously launching 1 Gig service in at least a dozen communities as it upgrades its HFC networks for faster broadband speeds. In addition, Fidelity has developed and deployed a next-gen, app-based video service strategy in tandem with MobiTV, which enables it to offer support for several TV-connected retail platforms, including Amazon Fire TV devices, several media players running Android TV (Xiaomi's Mi Box and the Nvidia Shield among them), Apple TV boxes and Roku players.
As a result, Fidelity ought to be a good fit for Cable One, which is now rebranding itself as "Sparklight" as it continues to de-emphasize pay-TV in favor of much higher-margin broadband services. Cable One ended 2018 with about 600,000 residential data subscribers, but only about 310,000 residential video customers as its pay-TV base shrinks. Disdaining legacy pay-TV services, the MSO no longer invests in its unprofitable video platform, opting instead to leverage with a platform that uses TiVo software.
"Cable One is a post-video cable business," Craig Moffett, an analyst with MoffettNathanson, said in a research note issued earlier this year. He noted that the company's margins have remained quite high (broadband ARPU in Q4 2018 was up 9.4%, to $69.90) despite its heavy video sub losses and slower revenue growth.
With its network passing some 20,000 businesses, Sullivan, Mo.-based Fidelity should also boost Cable One's business services drive. Cable One also touts Fidelity's upgraded cable systems, which consist of more than 5,100 network plan miles and more than 1,600 fiber route miles.
In a provocative new BBWN webinar, Broadband Success Partners' Jack Burton will delve into cable's next-gen HFC architecture plans and explain why going all-fiber may make more sense for operators right now.
It wasn't long ago that TV was ranked by subscribers as the most important service in the bundle provided by their communications service provider (CSP). Recent research indicates that for nearly three quarters of subscribers, broadband is now the most important service. Broadcast TV is the most important service to only 15% of North American consumers, replaced by OTT video streaming platforms like Netflix, Amazon Prime and Disney+. In addition, many different competitors are moving aggressively to stake a claim in consumers' homes.
In 2020, CSPs need to fight back by transforming their business models, which are becoming more reliant on a single source of revenue: fixed broadband services.
This webinar will focus on helping CSPs transform their business models by placing a firm focus on delivering a sensational subscriber experience and by offering compelling new services that generate value for subscribers. These actions will reinforce the CSP's strategic position in the home network and position themselves for growth in the next decade.
Key topics include:
Being the first to market with WiFi 6 technology, in response to consumer purchases of new devices over the holidays;
Having the insights needed to proactively resolve issues, often before your subscribers even know that there are issues;
Providing help desk agents with the visibility they need to resolve common subscriber issues more quickly;
Delivering a mobile app, in response to consumer demands for the ability to do some things themselves, rather than having to call technical support; and
Addressing consumer concerns around device security, privacy and control with enhanced security and parental controls.
In this insightful Light Reading radio show, Kurt Raaflaub, Head of Strategic Solutions Marketing, will outline the key service provider challenges, deployment considerations, next-gen Gigabit technologies, and service models to win market share in the rapidly growing MDU market.