I didn’t think regulators would actually step into the ring and try to stop Comcast’s purchase of TW Cable, but they seem to be doing so. The FCC’s staff has apparently recommended that the proposed transaction be given an administrative hearing before a judge. That’s what the FCC does when it disapproves, as in the case of AT&T/T-Mobile.
The move comes a few days after news of objections to the merger coalescing among the staff over at the Department of Justice. The top brass at both the FCC and DOJ have yet to weigh in, and nothing will have happened until they do. But the wind has definitely shifted against Comcast’s plans, and the bigwigs have the cover they need to make it official.
Of course, Comcast and TW Cable could fight it out in court, but given the growing opposition they might just choose to cut their losses soon. Then as the other dominos fall (Charter’s deals with Comcast and for Bright House) the question will be what plan B is for each of these four cable operators.
Comcast will basically have been told not it can’t have a bigger share of this particular pie, and would perhaps have to look overseas or into technologically adjacent markets for inorganic expansion. In other words, look at European or Latin American cable assets, or move toward the cloud or deeper into the enterprise connectivity spaces.
But Charter will suddenly have a new green light to go after TW Cable again, although the latter might simply decide to forgo M&A altogether for now rather than settle for a lower bid. Might John Malone step out from behind the curtain and bring Liberty Global into the fray?
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As I said when this deal was announced, it makes no sense, especially w/o a breakup fee. Of course, I also thought it was head fake b/c I didn’t think TWC could be that stupid to enter into an arrangement w/o a breakup fee. Very bizarre.
Good post. My commentary to enterprise users also noted that it’s a fiction (although a typical one put forward by merging telecom-related entities) that an acquisition makes it MORE likely for them to do cool stuff, like in this case really organize themselves for national enterprise RFP bids.