(Source: cmorran123/Flickr)
Why compete when you can just merge and name you own prices?

Comcast Corp. (CMCSA) is expected to on Thursday officially announce a mind-blowing deal, which would mark the biggest consolidation in over a decade in the cable television and broadband internet market, if allowed.  Comcast's bid will reportedly slot in at $159 USD per share of Time Warner Cable (TWC) stock, making the deal worth just over $45 billion. 

Bloomberg, Reuters, and The New York Times are all reporting that the deal will be announced tomorrow.  And most tellingly, NBC News -- whose parent company is owned by Comcast -- also is reporting the deal will become official on Thursday.

The deal would create a market behemoth, merging together the first and second place competitors in both the TV and broadband internet markets.

Comcast has roughly a 25 percent share of the broadband market; TWC controls around 12 percent of the market [source].  Comcast currently controls roughly 19 percent of subscription cable TV market; TWC controls around 9 percent of it.  Together the pair would control roughly a third (37 percent of broadband; 28 percent of cable TV) of two vital U.S. communications markets.

On a local scale the deal would be a massive win for Comcast and a massive loss for consumers, who would see scarce competition (Time Warner Cable vs. Comcast) reduced to none.

Comcast Cable

In all likelihood the deal will face lawsuits from the U.S. Federal Communications Commission (FCC) and the U.S. Department of Justice (DOJ) on antitrust grounds.  The Motley Fool writer Anders Byland wrote about this possibility back in November 2013, when the bid was just a rumor.  He titled his piece "The Time Warner and Comcast Merger Can't Happen. Here's Why."

In it he writes:

I would advise you not to hold your breath awaiting this business combination. Here's why.

Having Time Warner join forces with Comcast would create a massive cable operator. I mean an industry giant of epic proportions. Comcast serves nearly 22 million video subscribers, and Time Warner is No. 2 in the cable TV industry, with more than $11 million customers. The third-largest cable service provider is Cox Communications, with just 5.4 million households to its name.

You see the problem, right? In a total TV service market of 116 million households, including satellite subscribers and rabbit-ear antennae, Comcast wants to grow its market share from 19% to 28% in one fell swoop.

I don't think our regulatory bodies are going to like that idea.

Comcast's deal -- which it plans to do with all stock and no cash -- is slightly less than than the $160 USD/share price that TWC customers were targeting.  But it's much better than $133 USD/share from Charter Communications Inc. (CHTR), an offer which TWC rejected in mid-January.  That deal would have perhaps stood more of a chance with regulators, though, given that Charter actually has fewer subscribers than TWC (or Comcast).

Time Warner Cable
[Image Source: Reuters]

Unless federal regulators are asleep, this deal will almost certainly face far stiffer opposition.  Comcast isn't exactly best friends with the FCC, which will likely work against it.  The broadband provider famously fought to kill federal regulators' net neutrality rules in an appeals court.

Sources close to Comcast say it will divest 3 million cable subscribers (or about a tenth of the combined company's subscriptions).  That's a small gesture, but it's probably not even on par with the measures AT&T, Inc. (T) was willing to concede to had the DOJ and FCC agreed to allow it eliminate/gobble up its competitor T-Mobile USA (a Deutsche Telekom AG (ETR:DTE) subsidiary) in a similar deal.  And we all know how that story ended...

Sources: NBC News, Bloomberg, Reuters, The New York Times

"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain

Latest Headlines
How Apple watch Series 2 differ from the S1
February 18, 2017, 5:37 AM
Chuwi LapBook
February 6, 2017, 6:49 AM
LG Watch Style
February 5, 2017, 8:00 AM
New iMac and Release Date
February 4, 2017, 9:30 AM

Latest Blog Posts
Around the World
Saimin Nidarson - Feb 18, 2017, 5:48 AM
News of Future
Saimin Nidarson - Feb 17, 2017, 6:30 AM
Some News
Saimin Nidarson - Feb 14, 2017, 5:36 AM
What's New?
Saimin Nidarson - Feb 10, 2017, 6:15 AM
Unleashed News
Saimin Nidarson - Feb 9, 2017, 6:00 AM
Eye catching news
Saimin Nidarson - Feb 8, 2017, 6:16 AM
Some World News
Saimin Nidarson - Feb 7, 2017, 6:15 AM
Today’s news
Saimin Nidarson - Feb 6, 2017, 10:11 AM
Some News
Saimin Nidarson - Feb 5, 2017, 7:27 AM
Notes and News
Saimin Nidarson - Feb 4, 2017, 5:53 AM
World News
Saimin Nidarson - Feb 3, 2017, 5:30 AM
Gadget News
Saimin Nidarson - Feb 2, 2017, 7:00 AM
News Around The World.
Saimin Nidarson - Feb 1, 2017, 7:20 AM
Some News
Saimin Nidarson - Jan 31, 2017, 7:57 AM
Tips of Today
Saimin Nidarson - Jan 30, 2017, 6:53 AM
What is new?
Saimin Nidarson - Jan 29, 2017, 6:26 AM

Copyright 2017 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki