
Given the government's love of mergers and acquisitions in the broadband space over the last decade, Comcast's acquisition of Time Warner Cable initially seemed like a done deal. But as Comcast has taken repeated fire for horrible service and anti-competitive behavior (not to mention what seems like an endless stream of half truths about the merger's benefits), doubts have started to creep in on many fronts.
Investors have started to wonder if the deal is going to get approved, and it's been hitting Time Warner Cable's stock pretty hard:
quote:
Time Warner Cable s stock has dropped precipitously in recent weeks, falling more than 10% since the end of 2014. At $136.56 per share, its stock is also trading more than 10% below the value of Comcast s offer, which gives Time Warner Cable shareholders 2.875 shares of Comcast for each share they own. Concerns are mounting that the Federal Communications Commission or the Justice Department could block the merger outright or that the FCC could try to get major concessions out of Comcast to approve it. If it does the latter, some analysts think that Comcast might simply walk away.
Similarly analysts like BTIG's Richard Greenfield have noted it's
not looking great for the Philadelphia-based cable giant:
quote:
"After the Comcast-Time Warner Cable deal was announced, it seemed a forgone conclusion to us and the investment community that regulators would take the local approach--leading to the approval of the transaction with an array of strict, but not onerous conditions in a consent decree," Greenfield wrote. "However, a populist groundswell in favor of net neutrality emerged last summer, along with media/technology industry and press noise surrounding net neutrality, peering/interconnection issues and general opposition to the Comcast-Time Warner Cable transaction has brought a whole new level of scrutiny."
It's entirely possible the FCC could apply some meaningful conditions, but it's also entirely possible the FCC argues that a larger Comcast isn't good for anybody other than Comcast. The merger has seen particularly heated review in New York State, which just passed a new law requiring that mergers must serve the public interest. Comcast, historically awful customer service in tow, has had a hard time selling the merger as a boon to users.
Less scrutinized for some reason has been AT&T's proposed acquisition of DirecTV, despite the fact that
that deal would eliminate one of AT&T (and Comcast's) direct pay TV competitors in a sector that already struggles with price competition.
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