In what can be described as a historic deal, Philadelphia-based Comcast Corp. – the country’s largest cable operator – is purchasing New York City-based Time Warner Cable – the second-largest cable operator for $45 billion, or $159 a share in an all-stock deal.
The combined entity will boasts 30 million subscribers when Comcast plans to divest three million households due to antitrust concerns. Comcast will also control a third of the U.S. pay TV market and more than half of the Triple Play: video, voice, and broadband Internet. The deal gives Comcast entry into parts of the New York City and the entire Los Angeles market, which are under Time Warner Cable control. Comcast’s largest U.S. market is Chicago, followed by Comcast’s hometown, Philadelphia. Proponents behind the deal say neither company overlaps in any zip code.
Charter – who was also a suitor for Time Warner Cable – is the nation’s fourth largest cable company, behind Cox. Charter serves the St. Louis market.
The deal represents the latest move by Comcast to expand. In 2010, it purchased NBC Universal for $13.75 billion.
The Federal Communication Commission and the Justice Department must approve this deal, and possibly the Federal Trade Commission. There is no doubt politicians on both sides of the aisle will weigh in, too.
As expected, news of the Comcast-TWC merger was ferociously panned on social media and elsewhere. Many think the deal would lead to higher prices and less competition and even worse customer service. Others fear a combined Comcast-TWC would undoubtedly wield a large amount of clout in negotiations. Activist groups diverse as Free Press to the Parents Television Council to the Writers Guild Of America wasted no time in opposing the deal.
The deal also could be bad news for streaming services such as Netflix and Apple TV as they depend on broadband to deliver programming – broadband Comcast-TWC now controls in over half the country.
Meanwhile, Time Warner Cable has three sports cable channels in Southern California – one for the Los Angeles Dodgers (which launches next month) and two with the Los Angeles Lakers, which announced a deal with TWC to launch their Sportsnet three years ago tomorrow. They would join the Comcast SportsNet and NBC Sports family, which includes Comcast SportsNet Chicago.
In Chicago and Northwest Indiana, Comcast is the dominant MSO with a market share above 75 percent, despite the presence of alternatives such as AT & T U-Verse, RCN, and Wide Open West – but not all of them are available in all areas.
There is no doubt this deal will have an industry impact from Philadelphia to Hollywood, from New York to right here in Chicago (the Cubs would definitely have to go through Comcast-TWC if they ever want their own cable network launched – a feat easier said than done.)
Will this guy become the new face of cable in America?
Or this guy?
Either way, we’re screwed.