Arris ‘Holding Our Breath’ On Comcast/TWC DealCEO Bob Stanzione Hopeful That Capex Spending Won’t Slow As MSOs Complete Their Mating Dance 2/18/2014 10:20 AM Eastern
Tampa -- NCTC Winter Educational Conference -- Based on analyst predictions that Arris is the supplier with the most to gain in the wake of last week's proposed Comcast-Time Warner Cable merger, one might think that the vendor is jumping for joy.
Think again. Both of its feet are firmly on the ground, careful not to exude overconfidence about those future prospects. Arris, said company chairman and CEO Bob Stanzione, is “holding our breath” to see how the deal might affect spending later this year, wary that TWC might decide to pull the purse strings tighter during this coming period of uncertainty.
“Vendors are doing a wait and see on what’s going to happen here,” Stanzione said here Tuesday during an on-stage chat with Rich Fickle, the president and CEO of the National Cable Television Cooperative, an organization that negotiates technology and programming deals for about 900 independent cable operators.
The ink is barely dry on the mega-merger, but so far it’s been “business as usual,” Stanzione said in his first public comments about the proposed deal since it was announced on February 13.
Stanzione said Arris, which reports fourth quarter results on Wednesday (February 19) afternoon, is anticipating a solid 2014. “We are expecting there to be a fairly good amount of investment in cable systems around the country and, in fact, the world as the economic climate has gotten better,” he said.
Stanzione said he was not surprised to see a new deal for TWC emerge after Charter Communications made its initial bid and rumors follows that Comcast was somehow getting involved.
“Frankly, I was a bit surprised at the way it happened,” he said. The tension that led to it “quite honestly was not fun to watch.”
Although Stanzione expressed some concerns that capex spending might slow down as Comcast and TWC try to complete their mating dance, analysts who follow Arris are far less worried.
“In our view, regardless of the ultimately likelihood of a completed deal, the tone across the industry is that capital investments must continue in order for the cable industry to remain competitive with both Telcos as well as other next generation over-the-top alternatives,” Raymond James analyst Simon Leopold said in a research note issued last week.
Here at the show, Stanzione said he remains bullish about the future need for video devices in the home, pouring cold water on the notion that they will become extinct as that functionality gets virtualized into IP-connected devices.
“Our belief is that the set-top is evolving rapidly to something different than what it is [today],” he said. “We are moving from traditional set-tops to home gateways that are all-in-one solutions. We think that business is robust.”
On the new video services front, the Arris exec predicted that 4K “will be here to stay” despite its relative nascence in terms of both TV sales and programming available in the format.
“I think over the next two to three years we’ll see it happen,” he said, noting that Arris is continuing to invest in products that support H.265/HEVC, a bandwidth-efficient codec that’s expected to play a prominent role in 4K/Ultra HD rollouts.
Stanzione also played to the crowd of independent cable operators here, noting that the group continues to represent a “very important and very attractive market” to Arris.
But he also urged the NCTC and its constituents to work with Arris on nailing down common technology approaches that can help it and other vendors develop products in “sufficient volumes.”