Last night, Comcast and Time Warner — the #1 and #2 cable and broadband companies in the U.S. by a mile — dropped a bombshell by agreeing to $45.2 billion acquisition.
The deal is already under heavy criticism from the media and antitrust advocates, and investors clearly don’t have confidence that this deal will happen. For Comcast, this is a “free” shot at acquiring its largest competitor — the merger is unique because it has NO breakup fee. It demonstrates a lack of confidence by TWC and Comcast as well.
But I want to focus on a different question: if Comcast did succeed in acquiring Time Warner with minimal divestitures, just what would the new company — let’s call it NBComcasTWC — control?
I’ve been digging a little, and this is what I’ve come up with so far. I’m certain I’ve missed other key strategic assets of both companies, but it boils down to this:
- 33 million cable TV and broadband subscribers: Comcast has approximately 22 million subscribers, and TWC has approximately 11.2 million. Comcast is offering to voluntarily drop 3 million for this deal to go through. Just to give you an idea of how impressive that is, there were approximately 83 million broadband subscribers at the end of last year in the entire U.S. This also includes previous cable acquisitions from AT&T and Adelphia, which TWC & Comcast split up after its bankruptcy.
- 43 of the 50 top markets, including the top 10 and 23 of the top 25: NBComcasTWC would have a presence (and in many cases, complete control) over broadband and cable pipes in: New York, Los Angeles, Chicago, Philadelphia, Dallas-Ft. Worth, the San Francisco Bay Area, Boston, Washington, DC, Atlanta, Houston, Detroit, Seattle, Tampa, Minneapolis-St. Paul, Miami, Denver, Orlando, Cleveland, Sacramento, Portland, Pittsburgh, Raleigh-Durham, Charlotte, Indianapolis, Baltimore, San Diego, Nashville, Hartford, New Haven, Kansas City, Columbus, Salt Lake City, Milwaukee, Cincinnati, San Antonio, West Palm Beach, Grand Rapids, Austin, Harrisburg, Greensboro, Albuquerque, Jacksonville, Louisville and Memphis.
- Sports: Comcast SportsNet, MLB Network, Golf Channel, NBCSN and of course the NHL’s Philadelphia Flyers.
- Entertainment: E! Network, Bravo, Oxygen, Syfy, Esquire Network, USA Network, Telemundo.
- News: NBC News, CNBC, MSNBC, and a piece of The Weather Channel.
- Universal Pictures: Not including its massive library of content, Universal Pictures also controls the Despicable Me, Fast and Furious, Jurassic Park and Bourne.
- 1/3 of Hulu: No voting rights due to the NBC merger, but NBComcasTWC still has major incentive to favor Hulu over… let’s say… that one red-and-white video streaming site.
Does this constitute a monopoly? Should the FCC approve this deal? And if so, with what conditions?
I’m not 100% certain what the answer is yet, but I will say this: with 23 of the top 25 markets in its control, NBComcasTWC would have enormous, bone-crushing leverage over cable networks, studios, content providers and major Internet companies. Everyone from Google and Netflix to Disney and we, the consumers, would be affected.
So to the FCC and government regulators, I implore you to take a long, hard and skeptical look at this deal.
(Disclosure: I’m a decently happy Comcast subscriber who is scared about the impact NBComcasTWC would have on net neutrality.)
If you like this post, please share it and Recommend it below!
