Comcast to Integrate With Time Warner for an Agreement of $45 Billion

Comcast

It will cost Comcast $45 billion to buy Time Warner Cable company. This agreement will mark the integration of two of the most powerful cable companies in the U.S. However, it has not been decided yet if both companies will actually merge.

If the deal is approved, the merged companies will be the U.S. dominant provider of television channels and internet connections. It will also pave the way for Comcast to compete with and possibly outperform other satellite providers such as Direct TV, Verizon FiOS and AT&T as a wireless phone company, in addition to streaming services like Netflix.

Both Comcast and Time Warner Cable expect the success of their $45 billion integration agreement within the end of this year. However, regulators are still examining the potential impact of the merger on consumers. Comcast has its own markets, such as Philadelphia and Washington, D.C. On the other hand, Time Warner Cable has its own markets too, such as North Carolina and New York. Since Comcast and Time Warner Cable are not directly competing, it is doubtful that the integration between the two will be beneficial for consumers.

Comcast’s goal is to take possession of Time Warner Cable’s 11 million subscribers. Nevertheless, in order to appease regulators, Comcast intends to divest about 3 million out of their 23 million subscribers. Analysts are not really astounded by this number because it will still leave the company with a total of 30 million subscriber if the $45 billion deal succeeds.

Although both companies seem to be welcoming the merger, it may turn out to be a disaster like other previous combined companies. According to studies, from 1997 until 2008 around 28 mergers proved to have defeated customers expectations. Customer satisfaction ratings showed a significant drop after the union and the effect lasted for years. However, it does not have to be the case with Comcast and Time Warner Cable.

Comcast, like any other company, has its cons and pros. It is considered to be the largest cable company and home internet service provider in the U.S. In addition, it is the third largest home telephone service provider in the nation. However, customer-satisfaction surveys showed that the internet people receive is poor and rather slow. It has been revealed that almost half of all cable customers have filed complaints and that cable is the only industry to score under 60 in the American Customer Satisfaction Index, which is considered the lowest score in companies. Surveys indicate that the customer service has not been improved since the beginning of surveys in 2001.

In spite of the weak points found in the Comcast system, the company asserted that the merger would add to its network, enhance the service provided and boost the speed of the internet. Moreover, Comcast will keep Time Warner’s networks of 30,000 community WiFi hot spots as well as its home security system. However, it is not determined yet if the internet speed would be limited as is the case with Comcast or unlimited as it is with Time Warner Cable. Although it has not been decided yet if both companies will integrate, many are curious to know the results of the $45 billion agreement.

By: Mona Salman

Sources

CNN

The Washington Post

USA Today

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