Most cablers have long complained about bundling, whereby owners of multiple networks give them better prices on popular nets only if they also carry the unwatched dogs. So why did Cablevision Systems, the fifth-largest traditional cable operator, haul Viacom into federal court in Manhattan over the issue?
You might think Cablevision sued because it has no programming assets, having spun off AMC Networks in 2011. But Cablevision’s controlling Dolan family still owns a chunk of AMC. Even so, the Dolans would have less fear of upsetting the programming gravy train than, say, Comcast’s controlling Roberts family. As the owner of NBC as well as major cable nets, Comcast wouldn’t shoot itself in the foot by protesting another company’s bundling practices.
Other operators without major programming interests, including Time Warner Cable and Charter Communications, said encouraging words about Cablevision’s action, but haven’t joined the suit. That’s the legal equivalent of offering to hold Cablevision’s jacket while the company spars with Viacom.
Comparing the balance sheets of the four largest publicly traded traditional cablers offers a clue to Cablevision’s action. Comcast has the strongest balance sheet, with long-term debt only 36.8% of capital, according to S&P Capital IQ. At both Time Warner Cable and Charter, capital exceeds long-term debt.
Of the four, only Cablevision has debt greater than capital.
With the weakest balance sheet among major cable operators, Cablevision has the greatest financial need to hold down programming costs. Ledger-domain
Debt of major publicly
traded cable companies
Cable operatorLong-term debt
to capitalCablevision206.3%Charter Comm.96.9%Time Warner Cable73.5%Comcast36.8%
Sources: Company reports; S&P Corporation Records