Comcast's Balance Sheet Secret (CMCSA)

Mar. 28, 2006 6:07 AM ETCMCSA, T, VZ
Andrew Schmitt
66 Followers
Broadband Issues points to a great article on local video franchising and the impact of eliminating them in favor of a national franchise. Here’s a key passage the article (emphasis mine):

Reclassifying Asset: Cable companies currently listing their local cable franchises as assets will need to figure out a new way to capitalize on this local relationship, reclassify these video franchise assets, or possibly write off these video franchise assets. For example, Comcast (CMCSA) currently lists its cable video franchises as nearly half ($51 billion) of its over $104 billion dollars of assets. It is able to list this asset as until the national video franchise is realized, the local cable franchise represented a pseudo monopoly to provide video services to a community’s residents. However, the advent of a national video franchise eliminates these pseudo video monopolies so the value of these franchises that are declared as assets could come in to serious question by the financial community.

Even if local video franchises are not rolled back by Congressional action, the emergence of solid competition in these franchise areas clearly has a depreciating impact on those assets as well. Either way, it appears that the balance sheet of Comcast Corp. is due for a rather large adjustment.

The local video franchise has turned into a public piggy bank for towns. Municipalities extort gather fees from the local cable company, and sometimes demand perks like carrying a local access video channel and funding the equipment necessary for it. Instead of encouraging an open market for video services in a town, most towns try and preserve the monopoly for the solid tax stream it brings in -- costs ultimately paid by town residents who subscribe to the service.

I don’t think the cable companies like this racket but now

This article was written by

66 Followers
Andrew J. Schmitt is an expert in the carrier networking industry and the financial institutions that invest in them. Mr. Schmitt has held multiple positions at Vitesse Semiconductor including his role as Product Line Director for Carrier Networking Silicon, where he was responsible for the business unit that conceived, designed, and sold products to makers of Carrier Telecom Equipment. He is the holder of one issued as well as multiple pending patents. Mr. Schmitt is a noted public speaker on trends in technology and has been invited to speak at numerous panels and conferences including the Optical Fiber Conference (OFC), National Fiber Optic Engineers Conference (NFOEC), NXTComm/SuperComm and the Gilder Technology Conferences. He has also contributed many articles for media publications including EETimes, Lightwave and Lightreading. He holds a BSEE in Electrical Engineering from the University of California.

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