Comcast, Time to reshape future of US pay TV

MANILA, Philippines - Comcast Corp’s proposed $45.2-billion takeover of Time Warner Cable Inc could face close scrutiny from US antitrust regulators because of the deal’s potential to reshape the country’s pay TV and broadband markets.

The company resulting from the merger of the top two US cable service providers would boast a footprint spanning from New York to Los Angeles, with a near 30 percent share of the pay TV market as well as a strong position in providing broadband Internet services.

The all-stock deal, announced on Thursday, would put Comcast in 19 of the 20 largest US TV markets, and could give it unprecedented leverage in negotiations with content providers and advertisers.

The friendly takeover came as a surprise after months of public pursuit of Time Warner Cable by smaller rival Charter Communications Inc, and immediately raised questions as to whether it would be blocked by the Department of Justice or the Federal Communications Commission.

Time Warner Cable shares jumped 6.8 percent to $144.50, still substantially short of the $158.82 per share value that Comcast put on its offer, indicating investors’ worries about regulatory clearance. Comcast shares fell 3.5 percent, cutting the per-share offer value to $154.

“I don’t know if the deal is too big to fail to be approved but it is definitely too big to sail through either the Department of Justice or the FCC without serious, serious examination,” said former FCC chairman Reed Hundt.

“Only Comcast could have paid this price and the combined company, if approved, would tilt the balance of power at every negotiating table in media and content and broadband and equipment industries.”

Comcast chief executive Brian Roberts said he was confident about getting the green light from regulators as the two companies plan to divest three million subscribers, so that their combined customer base of 30 million would represent just under 30 percent of the US pay television video market. He said no decisions have been made on which markets to sell.

The new cable giant would still tower over US satellite competitor DirecTV, which has about 20 million video customers.

Comcast argued that the acquisition would be beneficial to consumers in that it would roll out its more advanced cloud-based set-top boxes to Time Warner Cable customers. It also said the deal would eventually result in higher broadband speeds.