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 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.