Quantcast

Comcast Reportedly Considering Merger With Time Warner Cable

November 24, 2013

redOrbit Staff & Wire Reports – Your Universe Online

Comcast is reportedly considering jumping into the potential bidding war for Time Warner Cable (TWC), the second-largest cable service provider in the US.

According to USA Today reporters Roger Yu and Alistair Barr, an unidentified source said to be familiar with the negotiations claims that TWC reached out to Comcast, the country’s largest cable company, about a possible merger. Those discussions are reportedly being encouraged by shareholders in both companies, who emphasize the compatibility of the two firms and regulatory changes that could pave the way for such a deal.

“It isn’t clear how serious Comcast is about pursuing a deal for Time Warner Cable, and one of the people cautioned that Comcast may opt out of the deal-making altogether,” Shalini Ramachandran, Dana Cimilluca and Brent Kendall of the Wall Street Journal said, adding that there are “considerable” obstacles to a potential merger between the two cable giants.

“If Comcast were successful in buying all or part of Time Warner Cable, it would enhance its already formidable power as the biggest media and entertainment company in the US,” they added. “Comcast not only serves nearly 22 million television subscribers, about a fifth of the country, but through its NBCUniversal entertainment unit owns a major film studio, the NBC broadcast network and some of the biggest cable channels, such as USA.”

Currently, Comcast has a market capitalization of $130 billion, meaning that it would have little difficulty purchasing the $38-billion Time Warner Cable. However, it is not the only potential suitor for the service provider, according to the Wall Street Journal. Stanford, California-based Charter Communications is also said to be close to gaining enough financial backing from banks to make a serious run at TWC, according to USA Today.

“People in the cable industry question whether Comcast could get regulatory approval to buy Time Warner Cable, or even whether Comcast Chief Executive Brian Roberts has the inclination to undergo another long antitrust review” in the aftermath of its 2010 NBCUniversal acquisition, Ramachandran, Cimilluca and Kendall said. “But lawyers and analysts in Washington say such a deal could get approved, with conditions. Cable operators don’t directly compete with each other, but operating in discrete geographic areas.”

Other experts aren’t convinced that a Comcast-TWC partnership would be a done-deal, however.

Harold Feld, senior vice president of the communications industry advocacy group Public Knowledge, told US News and World Report that such a merger “ought to be unthinkable… Comcast is already super huge in terms of its market power in every single area of telecommunications and media. It would be very difficult to argue a public interest benefit. Time Warner Cable is far from bankruptcy, so they don’t need money to upgrade their systems.”

“A key question for the Justice Department and the Federal Communications Commission would be whether a combination of Comcast and Time Warner Cable would be so powerful that it would have too much leverage over content providers,” the Wall Street Journal added, citing information provided by a former government official with knowledge of previous cable transactions. “At a minimum… a Comcast-Time Warner Cable deal would likely be subject to many of the same types of restrictions imposed on Comcast’s NBCU acquisition, which included conditions aimed at preventing it from discriminating against content providers on its broadband service.”


Source: redOrbit Staff & Wire Reports - Your Universe Online



comments powered by Disqus