Wednesday, January 20, 2016

Time Warner Celebrates their merger with Champagne, Caviar & Rate Hikes...

Based on the popularity of yesterday's cable modem post I thought I'd follow-up with another Time Warner/Charter news story that emerged from Albany yesterday.

Time Warner and Charter Communications finally completed their merger just 10 days ago.  As a reminder regulators had previously scrapped a proposed Time Warner/Comcast merger because it would harm consumers and limit competition.

However, according to this story from the Albany Times Union Time Warner appears to have decided 10 days is long enough to wait before putting a world of hurt on consumers.

"Time Warner’s standard TV package will increase from $76.99 a month to $78.99 a month.

The TWC Sports Pass, a premium sports tier that is added on, is rising from $8.99 a month to $10 a month.
There are also new prices for the company’s basic and standard Internet services, which will now be $49.99 a month and $59.99 a month, although it is unclear what the current prices are for those offerings."
I believe that traditional cable TV services are locked in a death spiral similar to that which the US Postal Service faces.  They have soaring costs and shrinking subscribers so they raise prices which forces more users to cut the cord (and migrate to Amazon or Hulu or Netflix) which.....
reduces revenue, so they raise prices which chases away more customers which....
reduces revenue, so they raise prices which chases away more customers which...etc, etc.
The global stock market rout is back on this am.  We are back on the edge of the abyss from a chart perspective.  If we were to fall another 1-2% from here there is nothing to prevent a rapid collapse of 10% or so. This is eerily reminiscent of 2008 when markets would swing +/-3% every day however the speed of the market swings today is 10x what it was in 2008 so this is No Market for Old Men -- bonus points if you get the Cormac McCarthy reference :)

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