No one knows for sure exactly how Netflix's (NFLX) agreement with Comcast (CMCSA) will impact consumers and the cable industry. The deal that was agreed to on Sunday -- Netflix paying the nation's largest cable and broadband provider to get direct access to Comcast's customers at faster speeds -- has been described as a game changer for the industry.
Mark Kiesel, deputy CIO at PIMCO, says the move by Netflix was ingenious.
"if I was Netflix I would want to sign an agreement with Comcast because you're talking about a company with a combined 30 million subscribers...That is 6x larger than the next largest rival Cox," he tells The Daily Ticker.
Comcast wants to join forces with Time Warner Cable (TWC) in a deal valued at $45 billion. The merger still needs to be approved by regulators, but if all goes as planned, Comcast would provide cable to one-third of U.S. homes and 40% of American households that use high-speed Internet.
Kiesel, who is bullish on Comcast, says a Comcast-Time Warner union will have $15 billion in annual free cash flow, putting this combined entity in "a unique position to negotiate contracts for its clients."
Even as cable bills are increasing for consumers, especially for premier content providers like Disney (DIS), Comcast can still use its bargaining power to push down prices, Kiesel says.
"If you're a large player in the market, like Comcast is...you're going to be able to pass through some of the savings to customers," he adds.
And that's a good thing, because few Americans are willing to give up ESPN and HBO.
Will Americans soon have to pay more for broadband service? Watch the video to find out!
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