The regulatory negligence which allowed Liberty Global to buy Ziggo then subsequently merge it with Vodafone in the Netherlands is about to get a taste of consequence – with VodafoneZiggo setting the stage for an impending carriage war.
Chairman of the board at VodafoneZiggo, Jeroen Hoencamp, has contentiously told national newspaper De Telegraaf this week that the operator is poised to drop more linear channels from its network following the recent evaporation of several household names from its channel lineup. In doing so, he at least accepted that change is required if legacy pay TV companies have a future, which is more than can be said for many top executives in this industry, although it reads more like a direct threat to the networks that it will not stand for rising carriage fees. Flexing its muscles, VodafoneZiggo can drop channels which are generally seen as must-haves in a heartbeat. With a monopoly pay TV market share of approximately 65%, it can afford to.
“There is still a lot of linear viewing, but that is changing rapidly now that people are more likely to choose video on demand or to watch catch-up. This means that some content becomes less relevant and that translates into discussions with suppliers. The old model in which we pay broadcasters for distributing their channels is becoming outdated. The rise of the Netflixes of this world means that we need to reassess which content is relevant now. I think that the channel offerings will start to move, and a phase of rationalization will begin,” said Hoencamp.
Ironically, Hoencamp shunned the recent approval from Brussels to green light the merger of T-Mobile and Tele2. “I was surprised that the deal was granted without concessions. The Commission was previously not in favor of limiting the number of major providers from four to three. But the bottom line is that we still have a very competitive market,” he said.
In reality, the only reason this merger was waved through back in November is because the European Commission can hardly get upset when the third and fourth placed operators join forces to compete with the de facto monopoly in pay TV and broadband which it helped create.
Hoencamp also compared industry skepticism regarding 5G to how Netflix was once viewed as the enemy, but has since gone on to become every pay TV operator’s partner (bar a select few). “Netflix is one of the parties that make beautiful content that our customers like to watch. More and more will come of that. If we want to remain relevant, it is our role to present that offer as user-friendly as possible,” said Hoencamp.