Week in Review: Private Equity Fund TPG Merges Grande and RCN To Create Some Competition; Buzzfeed Is Splitting Into News and Entertainment Divisions
- Private Equity Fund TPG Merges Grande and RCN To Create Some Competition
There’s been a lot of consolidation as of late among the larger MVPDs— AT&T and DirectTV, Charter and TimeWarner—but there are still dozens of smaller MVPDs out there that can be rolled up and combined into something the larger MVPDs have generally not had to consider: competition. That’s the move private equity fund TPG pulled, combining RCN, the nations’ 15th largest MVPD with Texas-based Grande Communicatinos. Why That Matters If you look at all the things that are holding up modernization in the television industry, number one among them is the fact that video-ready broadband access is a monopoly or duopoly in most parts of the U.S.That means that it’s all but impossible for an OTT-only pay-TV provider to break into the ecosystem. As we’ve noted here before, it’s way too easy for the incumbent provider to jack up the price of a broadband-only connection versus a broadband + pay-TV “double play” connection. That’s not conjecture either, there are numerous documented examples.Lack of competition also means that MVPDs have little incentive to modernize their program guide interfaces or even treat their customers with respect—when the customer has no other option, there’s not much short-term business reason to focus on retention.That attitude is why the specter of cord cutting remains such a threat: while people are not currently ditching pay TV, many would like to, precisely because they feel their business is not valued by the MVPDs. Nothing like a little competition to alter that paradigm.Another interesting note about the TPG deal is that Google Capital is a junior partner in the deal. Some observers think that Google is very interested in possibly buying up some of these smaller MVPDs themselves, as they begin to realize the daunting (even for Google) costs of expanding their Google Fiber broadband service to other cities— a report yesterday has Fiber laying off half its staff. Of particular interest to them is RCN and Grande’s “overbuilder” technology, that lays in their last-mile cable over pre-existing lines, an easier and cheaper method than building everything from scratch. What You Need To Do About ItIf you’re a network, you want to re-examine your relationship with smaller MVPDs, make sure they feel you’re on their side. That way, if they are part of a roll-up, you don't come across as a Johnny-Come-Lately.If you’re an MVPD, you should identify potential acquisition targets among the smaller MVPDs—snap them up before they start combining into something resembling competition.If you’re an advertiser, just sit tight and hope that the new players will offer addressable TV advertising capabilities.
- Buzzfeed Is Splitting Into News and Entertainment Divisions
In a further sign that it’s growing up, the poster child for “how the internet is killing journalism” is launching its own news division, complete with video. It’s the latest move from Buzzfeed as it moves into a more video-centric future. Why That MattersBuzzfeed has been getting serious about journalism as of late, a damning (but denied) story about Twitter “hand moderating” the tweets of President Obama and other famous people being the latest example.As they move from listicles and exploding watermelons into something more serious, they’ll have greater appeal to the types of advertisers who want nothing to do with The 12 Hottest Redheads of All Time! What You Need To Do About ItIf you’re an advertiser, definitely take another look at Buzzfeed and see what the two new divisions are offering advertisers, particularly around video—Buzzfeed’s native ads have proven to be very effective.If you’re a TV network or MVPD, take a look at what they're doing with video and understand how you can do something like that too, to grow your Millennial audience. Licensing Buzzfeed’s content could be a great option.
TV[R]EV is written, curated and incubated by the BRaVe Ventures team. Find TV[R]EV on Facebook and Twitter, and sign up for the newsletter to stay up to date on the TV[R]EVOLUTION.
