HD broadcasts could cause cable buyouts

A report by the Denver Post has suggested that the increased costs of expanding into high definition broadcasting could force smaller cable companies to consolidate in order to remain competitive.

At present the US market in particular has a large number of smaller cable TV operators, but the need to provide HD channels requires capital investment that analysts think only the larger companies can outlay.

The result suggested is that smaller cable operators will either merge or else be bought out by larger operators over the coming years.

Time Warner has already been said to be considering the purchase of Cablevision, while Comcast recently bought Insight Communications, bringing an extra 684,000 subscribers to its services.

The increased HD provision by larger telcos, such as Verizon and AT&T could make it especially hard for the smaller companies to remain competitive.

While there is no outright movement to consolidation among cable companies at present, this could be accelerated if major independents joined forces, such as DirectTV and Echostar, in order to better position themselves to deliver a wide range of HD broadcasting options.