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Comcast to buy TimeWarner Cable
Old 02-12-2014, 10:18 PM   #1
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Comcast to buy TimeWarner Cable

More at this WSJ site., including the proposed stock deal.

From the article:
Quote:
The deal faces high regulatory barriers. Comcast not only serves more pay TV customers than any other company in the U.S., nearly 22 million video subscribers, but it also owns entertainment company NBCUniversal, parent of the NBC broadcast network and several big cable channels as well as Universal film studio. Time Warner Cable serves about 11 million video subscribers, although as part of the deal, Comcast has agreed to divest three million subscribers, the people said. Those divestitures will keep its ownership of the pay TV market below 30%, the people said
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Old 02-13-2014, 09:39 AM   #2
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I don't see the regulatory problem here. Cable is a local market and in each of their local markets they are already monopolies. I never have a choice between cable companies and if this deal does through, I still won't. Are they worried about the monopoly power in dealing with content suppliers?
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Old 02-13-2014, 09:51 AM   #3
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This has been rumored for months as Charter was trying to make a move. TWC made it clear they prefered Comcast as a buyer.

disclaimer: I w*rk in the industry, although not for a cable operator. Both companies are customers... but I'm very low in the food chain and never have direct contact with them.

I read a not-so-amusing comment on one of the articles I read last night. Paraphrasing here:
"in unrelated news, both Comcast and Time Warner announce rate increases."

I thing the antitrust review will make them sweat - but they'll pass muster. In part because cable is operated as franchises, and in this case there is ZERO overlap of customer base. Secondly, cable has competition from the telcos (Verizon FIOS and ATT uVerse), so they will still have competition. And there's competition from the "OTT" (over the top) content providers like Netflix and Hulu. Given all this I suspect the deal will be approved by regulators.

Not sure how it's going to shake out for my job, personally. I'm sure it will effect my company... but they have to operate as two seperate companies until they merge - so any ramifications are many months off. (I've been through a few mergers/acquisitions, myself, in the past 3 years.)

A bit more on this... The NYT's article had this quote:
http://dealbook.nytimes.com/2014/02/...ype=blogs&_r=0
Quote:
Nonetheless, about 8 million current Time Warner Cable customers will become Comcast customers. That may be a good thing for those customers, as Comcast is seen as an industry leader in terms of providing high-quality television and Internet services, while Time Warner Cable has a reputation for poor customer service.
Time Warner, for the most part, has different systems than Comcast. They are unlikely to just throw away all of the head end equipment and settop boxes just because of the merger. So the end user is likely to see NO change in quality in the near term. However, going forward, new equipment will be compatible. Just my opinion...
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Old 02-13-2014, 03:19 PM   #4
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Oh boy. Just wait til the net neutrality agreement Comcast has with the FCC expires in 2018.

40% of all US internet, and most residential high speed service, bottlenecked through a single vendor. With their own content. Competing with Internet-based providers. Gosh. I wonder what will happen?
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Old 02-13-2014, 03:46 PM   #5
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Originally Posted by growing_older View Post
I don't see the regulatory problem here. Cable is a local market and in each of their local markets they are already monopolies. I never have a choice between cable companies and if this deal does through, I still won't. Are they worried about the monopoly power in dealing with content suppliers?
There are several worries:

* The monopoly power they will have over content providers;

* The recent court decision to strike down "net neutrality" giving them more of a monopoly on what goes through the Internet, how fast it goes and how much it costs to send (and its impacts on any streaming businesses that compete with them such as Netflix, Hulu and Amazon);

* The "redundancies" created, the layoffs that always happen after mergers, the additional strain put on an already overburdened social safety net (socialize the costs) in order to increase profits.

I'm sure there are more. But in reality, why even have antitrust and anti-monopoly laws on the books if you won't enforce them?
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Old 02-13-2014, 03:49 PM   #6
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The deal faces high regulatory barriers.
OH!
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Old 02-13-2014, 04:43 PM   #7
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... cable has competition from the telcos (Verizon FIOS and ATT uVerse), so they will still have competition. And there's competition from the "OTT" (over the top) content providers like Netflix and Hulu. Given all this I suspect the deal will be approved by regulators.
I think it will be approved too, but just because of the way the system is set-up, not because it will not do harm to consumers.

Cable operators have horrible customer service because they really have no competition in most places. Comcast has the absolute worst customer service of the bunch. And recent VPN tests show that they're already throtting video content from those OTT content providers. The US is the most backwards developed country when it comes to internet speeds and this will only make it worse. So if we can count on our system to do the wrong thing, then yes, it will be approved.
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Old 02-13-2014, 10:35 PM   #8
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...
I'm sure there are more. But in reality, why even have antitrust and anti-monopoly laws on the books if you won't enforce them?
Well, they did shut down the T-Mobile ATT merger, so maybe there is a sliver of hope?

We don't have cable, and I have an independent (fixed wireless) ISP. By the time we move, I sure hope there are internet options other than some monopoly supplier.

-ERD50
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Old 02-13-2014, 11:47 PM   #9
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It will not pass anti trust approval. Time to short the artificial stock price pop.
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Old 02-14-2014, 05:57 AM   #10
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Well, they did shut down the T-Mobile ATT merger, so maybe there is a sliver of hope?
Who can say. The parties are saying this is different because they almost never compete in the same markets.... which, while mostly true, is among the lesser of my concerns about this. The points I referenced above are still worrisome and could rear their ugly head whether they compete in the same markets or not. The bottom line is that they would be the 800 pound gorilla in the room when negotiating with content providers and deciding whose Internet packets get streamed faster, or which are charged more for the same amount of bandwidth (which could kill competitors).

I use this analogy: Let's pretend UPS bought the Interstate Highway System (or even 80% of it). At first UPS simply charges fixed tolls -- $X per month for the right to use the roads ("unlimited bandwidth"), or even $Y per number of miles driven ("metered bandwidth"), and at first all traffic moves at the same speed.

But then, they change the rules. Maybe they start charging FedEx trucks 20x more per mile than all other traffic, or they make FedEx trucks stop at a toll booth every mile to slow them down. Think that will make FedEx a lot less able to compete fairly in the marketplace?

That's what the combination of a behemoth controlling a massive portion of residential Internet and the death of net neutrality could bring.
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Old 02-14-2014, 06:06 AM   #11
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This could also end badly, one of those "what were they thinking?" strategies. Look at the number of recent threads about cutting the cable cord and cable free viewing options. The TWC monthly cable subscriber fees generate the cash needed to pay for this merger, and they'll need a couple of decades of strong cash flow to pay it down.
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Old 02-14-2014, 06:10 AM   #12
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This could also end badly, one of those "what were they thinking?" strategies. Look at the number of recent threads about cutting the cable cord and cable free viewing options. The TWC monthly cable subscriber fees generate the cash needed to pay for this merger, and they'll need a couple of decades of strong cash flow to pay it down.
This could also be a predatory response to "cutting the cable" -- especially after the ruling on net neutrality.

In theory, this behemoth could all but kill the "cut the cable" options like Hulu, Netflix and Amazon in any number of ways: charging them more to stream content over their network, slowing down their streams to make them all but unusable, placing harder bandwidth caps on subscribers to make these cost a lot more overall (what good is $8 a month if you have to pay an extra $100 in bandwidth overage fees to use it?).

In other words, control almost all the Internet provision for residential subscribers so they can cripple competing content providers trying to stream over their networks.
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Old 02-14-2014, 06:32 AM   #13
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This could also be a predatory response to "cutting the cable" -- especially after the ruling on net neutrality.
Good point, this too could be their scheme. In this case, though, I'm not sure the scale will be helpful in the lobbying effort to secure favorable changes in policy. There are many constituents, not only consumers, that would be disadvantaged if Comcast were to become the Darth Vadar of the internet.
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Old 02-14-2014, 10:34 AM   #14
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There are many constituents, not only consumers, that would be disadvantaged if Comcast were to become the Darth Vadar of the internet.
+1
advertisers, content providers, the entire entertainment business, sports, and even access to truth...
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Old 02-14-2014, 11:05 AM   #15
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Let's pretend UPS bought the Interstate Highway System (or even 80% of it). At first UPS simply charges fixed tolls -- $X per month for the right to use the roads ("unlimited bandwidth"), or even $Y per number of miles driven ("metered bandwidth"), and at first all traffic moves at the same speed.

But then, they change the rules. Maybe they start charging FedEx trucks 20x more per mile than all other traffic, or they make FedEx trucks stop at a toll booth every mile to slow them down. Think that will make FedEx a lot less able to compete fairly in the marketplace?
I like that analogy!
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Old 02-14-2014, 12:21 PM   #16
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Who can say. The parties are saying this is different because they almost never compete in the same markets.... which, while mostly true, is among the lesser of my concerns about this. The points I referenced above are still worrisome and could rear their ugly head whether they compete in the same markets or not. ...
Oh, I share all your concerns. I'm just questioning whether the gov't will stop the merger/buyout. Some recent history says yes, some says no.

If I had my way, they'd go a lot further in taking steps to restore competition, but I'm not holding my breath.


-ERD50
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Old 02-14-2014, 08:35 PM   #17
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Oh, I share all your concerns. I'm just questioning whether the gov't will stop the merger/buyout. Some recent history says yes, some says no.

If I had my way, they'd go a lot further in taking steps to restore competition, but I'm not holding my breath.


-ERD50
Painfully true. Very inconsistent rulings and usually not resulting in what is best for the American public.
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Old 04-24-2015, 09:20 AM   #18
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Comcast couldn't make it happen.

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Comcast Corp. dropped its $45.2 billion deal to buy Time Warner Cable Inc., officially pulling the plug after concluding the merger would be rejected by regulators.

Comcast announced its decision Friday in a statement after a meeting of its board the night before. U.S. Justice Department and Federal Communications Commission objections made it clear the deal was dead.
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Old 04-24-2015, 10:16 AM   #19
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This is huge news. I worked in the cable industry prior to retiring last year. My BIL works for Comcast. I was getting phonecalls, emails, and texts from former coworkers, family members, etc yet. To add interest to this - another cable sector merger was announced earlier this week - the two biggest cable settop providers are merging. (Which is a deal that will go through). Arris (which acquired the Motorola settop group a few years ago) and Pace.

My last project at work, when I quit, was for Time Warner, but there was talk of it being canceled because of the Comcast deal... glad to hear my friends will still have that project.
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