No deal. Comcast will not merge with Time Warner Cable. It seems that all the work toward a $45 million merger is down the drain. Or is it?
When Federal Communications Commission (FCC) Chairman Tom Wheeler had serious concerns that the merger risks outweighed benefits to the public interest, the companies put the kibosh on the deal. Wheeler feared a merger would have created a company with the most broadband and video subscribers in the nation alongside the ownership of significant programming interests. It was just too much power for one company.
"Today, an online video market is emerging that offers new business models and greater consumer choice,” Wheeler said. “The proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services.”
No-Win for Customers
Comcast Chairman and CEO Brian Roberts took it well. He said the company is moving on. Although Comcast would have liked to bring its products to new cities, he said the company structured this deal so that if the government didn’t agree Comcast could walk away. That’s what it is doing, at least for now.
For its part, Time Warner’s Chairman and CEO Robert Marcus reassured customers that his company is “strong and getting stronger” and vowed to execute its operating plan and invest in its plant, products and people.
We caught up with Jeff Kagan, an independent technology analyst, to get his thoughts on the seemingly dead deal. He is not surprised, given he wrote a column on April 20 predicting that the FCC would not ultimately approve the deal despite some clear benefits.
“The problem is this merger only made sense for Comcast and Time Warner Cable. It did not make sense for the marketplace or the customers,” Kagan said. “Until it makes sense for both the companies, the marketplace and the consumers, this deal won’t be approved.”
Try, Try Again?
As Kagan sees it, the circumstances around the Comcast and Time Warner merger are very similar to the SBC-AT&T deal in the late 1990s. The nation’s smallest Baby Bell tried to acquire AT&T but the marketplace wasn’t ready for that kind of deal.
“Several years later SBC tried again and was approved to acquire AT&T. They kept the AT&T name and acquired BellSouth and Cingular,” Kagan said. “That transformed the smallest Baby Bell into one of the largest and most profitable companies in the world.”
Kagan said it is possible that we could see a similar end with Comcast and Time Warner Cable. If the companies try to merge again in a few years, the FCC may come to a different conclusion. To win FCC approval, customers need to have multiple choices for high-speed broadband and those choices could emerge in the years ahead, Kagan said.
“Perhaps as wireless moves to 5G and 6G the speeds will provide the ability to have television and high-speed Internet provided wirelessly,” Kagan said. “Perhaps AT&T U-verse, Verizon FiOS and CenturyLink Prism will continue to expand and other broadband providers will enter the scene, giving the customer more choice.”