Home » Comcast/Xfinity »Competition »TWC (see Charter) » Currently Reading:

It Begins: Wall Street Analyst Calls for Comcast & Time Warner Cable to Merge

Phillip Dampier September 10, 2009 Comcast/Xfinity, Competition, TWC (see Charter) 8 Comments
Bazinet

Bazinet

Citigroup media analyst Jason Bazinet is among the first Wall Street investment analysts to call for the mother of all cable mergers – Comcast snapping up control of Time Warner Cable, respectively the nation’s largest and second largest cable operators.  Comcast reported having nearly 23.9 million customers at the end of June; Time Warner Cable said it had about 13 million customers.

In a research note issued today, Bazinet argued that a merger would result in major cost savings for both operators, including $1.6 billion dollars in savings possible from volume discounts for cable network programming to $1.1 billion in savings from employee layoffs, reduced marketing expenses, technical and customer service support, billing, and combining equipment purchases, among other things.  The total net present value of the synergies would come to around $11 billion to $12 billion. That’s not far from Time Warner Cable’s current market value of about $14 billion, according to The New York Times.

A super-sized Comcast would also be able to leverage lower prices when competitively necessary to keep a price advantage over satellite television and telephone company TV, according to Bazinet.

Both Time Warner Cable and Comcast have not publicly indicated any interest in combining forces.  Aside from the regulatory headaches probable from a more skeptical Obama Administration that might aggressively counter such a merger, Comcast Chief Operating Officer Stephen Burke questioned whether the cost savings were anywhere near as high as Bazinet speculated.

Multichannel News quoted Burke:

“We would like to get bigger if the economics were right,” Burke said. “Its pretty hard for me to see how there would be synergies on the programming side or on the hardware side when you go from 24 million subscribers to 27 [million] or 30 [million].”

Time Warner CEO Glenn Britt refused comment.

Still, Wall Street investors were interested.  Time Warner Cable stock shot up 3.5% this afternoon, while Comcast’s rose just a few cents during afternoon trading.

Currently there are 8 comments on this Article:

  1. TM says:

    And I’m sure those cost savings would be passed on to the consumer as lower cable bills. I mean they are the cable company and they wouldn’t screw their customers would they….

  2. Ian L says:

    I really don’t see a problem with such a merger, as long as the cable companies are forced to offer every channel they have to sat or telcoTV at a reasonable price (under $5 per channel, a la carte). With that provision, I think the Comcast + TWC merger would be advantageous. It would mean that 50/10 internet would soon be available in all formerly TWC territories, and Comcast’s backbone plus TWC’s would mean that most traffic stays on-network, increasing quality of service. There’s no Cocmast-TWC competition in any area, so there’s no real reduction in competition, and maybe with that much size Cocmast can stand up to content provider rate increases.

    That said, the cable carriage provision is crucial, particularly for folks who can’t get cable.

    • Michael Chaney says:

      “There’s no Cocmast-TWC competition in any area, so there’s no real reduction in competition,”

      And I think you’ve pointed out a major problem with how this market operates today. These aren’t competitors merging. You can’t add up all the cable companies in this country and say “Look! There’s plenty of competition to choose from!”

      I think you’re right in that a merger wouldn’t change the competitive landscape, but it would serve to highlight just how uncompetitive it really is.

    • Alex says:

      The issue is that if you look at a relatively local provider with a strong base like Cablevision and see the types of products that they have to offer in the NY metropolitan area to compete and even compare it to companies like TWC and Comcast (which also service parts of the Tristate Area) which create national policies for their products (such as bandwidth caps, cable/internet service levels, tv buying/pricing power, etc), since losing customers in certain areas would not make that much of a difference, and they would not necessarily have to eat the local upgrade costs.

      For example just compare the speed levels TWC offers in Manhattan and Queens to what Cablevision can offer in the Bronx and Brooklyn.

      It would decrease the necessity for localized competition, in other words the large national MSOs would be able spread competitive risks on a national level and will be able to afford to spread poorer quality service on that national basis.

      You would think that areas near major hubs such as Manhattan, Queens, Fort Lee, Englewood cliffs along with the Bay Area (which is just Comcast and Comcast does enforce their 250gb cap) would generally have a lot more bandwidth than other parts of the country, yet TWC and Comcast still generally limit their speeds and bandwidth cap policies with an elastic national band and not on a localized basis.

  3. say what? says:

    How? TWC is owned by Time Warner…is Comcast going to buy Warner Studios, HBO, and all the rest or just Time Warner is going to magically give up a cash cow like TWC?

    • Smith6612 says:

      The last I checked Time Warner Cable is now a separate entity to Time Warner Corporation from before where TWC was owned by TW Corp.

  4. Uncle Ken says:

    “The last I checked Time Warner Cable is now a separate entity to Time Warner Corporation ”

    Looks good on paper Don’t it.

Search This Site:

Contributions:

Recent Comments:

  • Required: It's hard to believe people who just need entry level internet access are willing to pay $65/mo for that, alone. No wonder so many customers are fleei...
  • FredH: I keep hearing that (about trying to eliminate the 7 year no-data-cap requirement) and wonder how it's even possible. I hope the NYS AG will get invo...
  • John: It might be a problem with a person with disablities tries to pay and they charge them....
  • John: Well, time for everyone to start paying them by snail mail, then....
  • Mike D.: And for those who are planning to "cut the cord" after a promotion expires, be aware that Charter is lobbying the new administration and FCC chairman ...
  • Dylan: Huh, that's interesting regarding that Spectrum only saves 3/10 of its customers. Maybe there is something going on. And regarding my own promotion -...
  • Phillip Dampier: You were not on a promotion before which is why you got one this time. One year from now when your bill spikes and you call and complain, they will te...
  • Dylan: It's not that hard to get new customer pricing from Spectrum. I used to be a TWC customer paying $65/mo for 50 Mbps down internet. Once Spectrum came...
  • NM: Phillip, You may be interested in today's online story in Syracuse.com about what Spectrum's customers in CNY think about the merged company: http://...
  • Jim J: Dial tone is dial tone....
  • Julia: Even in life after TWC, if customer complaints remain the same or if a customer service rep claimed to have fixed a problem, but really didn't, you ca...
  • DPNY: As soon as Spectrum took over, my bill went up (a couple of dollars, but still)! I pay almost $250 a month as it is now for the package! I can think...

Your Account: