Comcast and Time Warner agree to merger

[TronPaul]

Comcast, Time Warner Cable to unite in $45.2B merger

Comcast, Time Warner Cable to unite in $45.2B merger
The deal would join the No. 1 and No. 2 cable companies in the US to create a pay-television behemoth -- but get ready for the antitrust backlash.

Comcast and Time Warner Cable, the country's biggest cable companies, agreed to merge in an all-stock deal Thursday that would create a pay-television giant with approximately 30 million subscribers, confirming wide reports of their proposed combination late Wednesday night.

Though consumer watchdog groups have already come out in opposition to such a deal, the companies pitched their marriage as something that would save money and improve their technological wherewithal.

"This transaction will create a leading technology and innovation company, differentiated by its ability to deliver ground-breaking products on a superior network while leveraging a national platform to create operating efficiencies and economies of scale," they said in a release.

The deal undercuts attempts by Charter, the country's fourth biggest cable provider, to take over its bigger rival Time Warner Cable. The larger cable company repeatedly spurned Charter's proposals, calling them too low. Charter had even worked in coordination with Comcast, agreeing with the still larger competitor on assets that Charter would sell to Comcast to make a Charter-TWC merger more palatable to antitrust authorities.

For consumers, the merger agreement between Time Warner Cable and Comcast will have no immediate repercussions, but the possibility of their joining has already raised the hackles of consumer advocates. They said it would raise costs for consumers and crimp rivals' innovation.

John Bergmayer, a lawyer at Public Knowledge, said that "an enlarged Comcast would be the bully in the schoolyard...it is simply dangerous for a large proportion of our nation's critical communications infrastructure to be in the hands of just one provider." Free Press CEO Craig Aaron said that "in an already uncompetitive market with high prices that keep going up and up, a merger of the two biggest cable companies should be unthinkable. This deal would be a disaster for consumers and must be stopped."

A deal of this size, combining the two biggest players in an industry, will face keen regulatory scrutiny. One thing working in the companies' favor is the fact that they seldom directly compete in individual markets. Comcast will acquire about 11 million Time Warner Cable subscribers, but Comcast said it is prepared to divest itself of about 3 million subscribers to smooth regulatory approval.

That element -- the scant geographic overlap -- is part of why the combination is so attractive for the companies: Comcast will get hold of high-profile markets like New York and Southern California, for example.

On Thursday, the companies said that Comcast would acquire all 284.9 million Time Warner Cable shares in exchange for Comcast stock, worth about $45.2 billion in equity value. They said the transaction will generate about $1.5 billion in saved costs from operating efficiencies. Comcast President and CEO Neil Smit will run the new company.

The new cable company would accelerate rollout of products, like Comcast's widely admired X1 operating system, according to the companies. "American consumers will benefit from technological innovations, including a superior video experience, higher broadband speeds, and the fastest in-home Wi-Fi," they said.

Comcast and Time Warner Cable will host a conference call at 5:30 a.m. PT to discuss the deal. It will be webcast on their investor relations pages.

This terrifies me. Absolutely terrifying.

[Borgholio]

I'm waiting to hear what the Federal Antitrust minions say about this. They've blocked smaller mergers in the past...

[Zwinmar]

Hey look, another monopoly (for the most part). Go figure.

[Terralthra]

The new company will be named "Why Is Netflix So Slow?"

[Brother-Captain Gaius]

Hatred for Comcast... rising.

I suppose the coming days will test my faith in US anti-trust law.

[Flagg]

Thank Christ for fios!

[Borgholio]

Fuck FIOS. I live in Burbank, CA...the media capital of the world. We don't have FIOS or U-Verse because we don't have the "population density". I'm stuck with Charter or AT&T DSL. *shudder*

[Alferd Packer]

Actually, you're stuck because Verizon took a shitload of money from the government to roll out FIOS and prompted fucked off with most of it. If they had used the money like they were supposed to, you probably would have had it by now.

[Guardsman Bass]

As the article itself points out, Comcast and Time Warner Cable rarely compete directly anyways. It mostly just gives Comcast more heft at the national level, and potentially more power to push back against content rights owners demanding higher fees (particularly cable channel owners).

In any case, it sounds like a good incentive for more investment in wireless broadband through the major wireless providers, and to allow for rival fiber/cable projects by changing local franchising laws along with more allowance for community broadband/cable.

[GrandMasterTerwynn]

As the article itself points out, Comcast and Time Warner Cable rarely compete directly anyways. It mostly just gives Comcast more heft at the national level, and potentially more power to push back against content rights owners demanding higher fees (particularly cable channel owners).

In any case, it sounds like a good incentive for more investment in wireless broadband through the major wireless providers, and to allow for rival fiber/cable projects by changing local franchising laws along with more allowance for community broadband/cable.

Sure, it gives them more heft to push back against content generators who aren't affiliated with them, but this isn't a good thing either; because it will (in four years) allow them greater freedom to insist that competing content providers (i.e. Youtube or Netflix) pay up for their 'fair share' of usage of Comcast's interweb pipes. End result: The consumer pays more. A bigger, nastier, Comcast will also have more muscle when it comes to negotiating cable franchising and access agreements with communities.

And, of course, a bigger, nastier, Comcast will also have deeper pockets to fight back against municipal publically-funded broadband ... and the major wireless providers are no more interested in upgrading their "last mile" of communications infrastructure than Comcast is. Why? They've got their own cartel to look after (they're every bit as interested in pushing their own content delivery services over the likes of Youtube or Netflix,) and they've conditioned the American wireless customer to fork over a hundred bucks a month for a teacup's worth of data access.

So sure, Comcast and Time Warner don't compete directly right now, but there is no way that the Comcast/Time Warner merger can be seen as a positive development for the broadband consumer. Comcast's people have already refused to promise that this merger will result in lower prices for the consumer, or even that it would curtail the growth in prices for broadband access.

In a properly-run country, the merger would've been axed, like, yesterday.

[Brother-Captain Gaius]

Relevant.

[phongn]

Actually, you're stuck because Verizon took a shitload of money from the government to roll out FIOS and prompted fucked off with most of it. If they had used the money like they were supposed to, you probably would have had it by now.

It's a little more complicated than that: the telcos all took a lot of tax incentives in the 1990s promising to deploy fibre to the home (100 megabits or so symmetric by the mid-2000s). They then discovered the costs would be huge and more or less begged the FCC to abandon that promise.

FiOS came from an entirely different initiative, but then Wall Street gave Verizon the middle finger due to the high costs of deployment (I believe it started c. $2000/house and ended around $800). VZ stock started dropping so they gave up on it, mostly.