In a surprise announcement this morning, Comcast has announced that they will be acquiring Time Warner in a merger that would combine the country’s two biggest cable companies.
The deal, which follows the two companies already dominant forces on their respective areas of the nation, was made based entirely on stock exchanging. Time Warner will be given 2.875 Comcast shares for every one of their shares. That stock is estimated to be worth $45.2 billion.
A potential deal had already been considered with John Malone of Charter Communications, negotiations having started months ago. The sudden swoop by Comcast has taken even the most speculative market analysts by surprise. It has also made many nervous.
With this combination, Comcast will become the largest cable company in the US. It also further solidifies their position as the dominant market, making a rather pretty monopoly that will be almost impossible to truly compete with.
This move is likely an equal response to Time Warner’s increasing customer complaints and service terminations, as well as the slow expansion of Google Fiber and other potentially dangerous competition to their empire.
Not only does Comcast provide cable TV, but also internet. With it being impossible for many within the United States to get service from anyone but a single ISP in their area, this will limit choices even further and create an unfair advantage to Comcast for future dealings.
There is still a chance the deal won’t go through, as the final decision has to be approved by federal regulators. But with the recent decision on Net Neutrality, and the way that both companies had already been allowed to grow to such an overpowering force on the market, it seems unlikely that we will see anything more than posturing and eventual approval.
It is sad, to see anti-trust laws being so easily ignored. But the technology industry as a whole has been notorious for that, and often fines are a minor price to pay for those companies who violate them.
An official release from Public Knowledge said it best:
An enlarged Comcast would be the bully in the schoolyard, able to dictate terms to content creators, Internet companies, other communications networks that must interconnect with it, and distributors who must access its content. By raising the costs of its rivals and business partners, an enlarged Comcast would raise costs for consumers, who ultimately pay the bills. It would be able to keep others from innovating, while facing little pressure to improve its own service. New equipment, new services, and new content would have to meet with its approval to stand any chance of succeeding.
Source: Bloomberg
