Comcast to Buy Time Warner Cable for $45 Billion Upon Regulatory Approval

Comcast Comcast Corporations bid to buy Time Warner Cable for $45 billion is making waves throughout the public and private sectors. The deal, if approved by regulators would break new ground in the real life version of monopoly. The proposed deal is sure to be surrounded by hot debates concerning monopolistic worries, net neutrality, and a host of smaller issues which will be affecting a wide array of interest groups.

The Comcast deal, which offers $158.82 per share is significantly up from the Charter Communications attempt. Charter offered around $38 billion or what amounted to $132.50 per share in its attempt to buy Time Warner. Both deals may have been sufficient to start the discussions expected to take place regarding monopoly fears, however the Comcast deal is much more likely to garner spirited discussions on other important topics such as net neutrality.

The deal would make it the largest internet and cable provider in the US. There is already expected to be an enormous amount of lobbying taking place in connection with the deal, with supporters and critics already chomping at the bit to have their opinions heard regarding the proposed acquisition. To critics, the Comcast deal would mean the creation of an essential monopoly which would likely have an adverse effect on consumer prices along with competition within the industry.

Although there are a number of critics to the proposed deal, Comcast may have the firepower, connections, and experience to navigate its way through to success. The company just underwent a sizable purchase of NBCU recently, and gained quite a bit of experience in maneuvering through the murky regulatory waters of the Justice Department and the FCC in its journey. After purchasing NBCU, Comcast was watched by regulators for some time to make sure that the result was not hurting consumers. The new proposed deal would seem to be possible considering that Comcast announced the deal with good understanding of the federal approval process, and presumably believing that it could find a way to make the acquisition happen.

Wall Street has shown mixed reviews of the deal, with many being skeptical of its viability due to the sheer size of the proposed new company. Comcast however, will not wait to hear them as it has already announced that it will buy Time Warner Cable for $45 billion, regulators willing. The few things going for the deal are that the two companies are not direct competitors, Comcast seems willing to make concessions, and that it could potentially keep programming costs down. These advantages however face the towering fact that the proposed new company would effectively control the broadband market. Wall Street analysts feel that the combined control of the cable industry would not be as large an issue in comparison to the broadband control along with the number of homes which would fall under Comcast’s umbrella.

Even with these facts brought out by those skeptical of the deal however, Comcast believes that it can do what needs to be done to make the proposal a reality. Implied in initial analysis of the proposal is that Comcast will sell off subs as necessary, in addition to hinting at its willingness to make other possible concessions with regulators. The attractiveness of the possible deal in the eyes of the FCC is that it may be leave open a backdoor to maintaining some level of control over the broadband market.

Recently, a District of Columbia Circuit Court of Appeals struck down the FCC’s open internet rules. Comcast however, in its past deal to purchase NBCU, agreed to FCC concessions regarding net neutrality. In recent talks, Comcast has reassured regulators that it intends to stand by this agreement. The FCC on the other hand may look at this new proposed acquisition as an attempt to gain a regulatory foothold on what could eventually be the largest cable and broadband company in the US. This could mean that although the courts have whittled away its power over enforcing net neutrality, it may have a sort of back door to maintain its regulatory power.

As it stands now, some analysts say it is still to early to tell just how the regulatory process regarding the proposed deal will go. Comcast however, seems confident enough to announce its bid to buy Time Warner Cable for $45 billion not long after going through the entire regulatory process for NBCU. This suggests that, though concessions would be necessary, consumers may “soon” be seeing the largest cable and broadband company ever in the US.

By Daniel Worku


Wall Street Journal


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