Regulators frowned on Comcast/TWC deal; will Charter/TWC be different?
Comcast is dropping its bid for Time Warner Cable after the Federal Communications Commission signaled that it would not approve the deal. Charter Communications may be set to back out of its bid for Bright House Networks and instead try to buy Time Warner Cable.
Comcast’s $45.2 billion offer to buy Time Warner Cable was made more than a year ago, and the deal’s chances of success have been dwindling for months. In February, California drove a nail into the coffin by approving the transaction with conditions that would have changed the deal’s economics had the companies accepted them.
Now the nation’s two largest cable providers are ending their courtship, but that does not mean the cable dance is over. Charter Communications is waiting in the wings, ready to rekindle its bid for Time Warner if Comcast backs away. Charter was trying to buy Time Warner last year when Comcast swooped in with a higher bid.
Cable industry veteran John Malone is Charter’s largest shareholder, and he has said that he still wants to try to buy Time Warner if he gets the chance. Now it looks like he may. But first he’ll need to extricate Charter from its $10.4 billion bid for Bright House Networks. There is almost no chance that regulators would approve Charter acquisitions of both Bright House and Time Warner.
Before he makes his move, Malone will need to calculate the odds that a Charter/Time Warner merger can win the government’s blessing. The Justice Department and the FCC will both need to approve the deal. The FCC will need to weigh the impact of a more concentrated cable industry against the possibility that cable networks will languish if providers are unable to compete with over-the-top video providers like Netflix.
No harm no foul
Comcast is able to walk away from the deal relatively unscathed as the agreement did not include a breakup fee.
“We structured this deal so that if the government didn’t agree, we could walk away,” said Comcast CEO Brian Roberts. “Today, we move on.”
Roberts also thanked the employees of both Comcast and Time Warner for their “tireless efforts” during the last year. “Throughout this entire process, our employees have kept their eye on the ball and we have had fantastic operating results,” he said.
Follow me on Twitter.
