The US$45.2bn merger between the US’ two largest cablecos, Comcast and Time Warner Cable (TWC), could lead to the creation of a new competitor in the market.
As part of the deal Comcast committed to divest three million subscribers in a pre-emptive…
The US$45.2bn merger between the US’ two largest cablecos, Comcast and Time Warner Cable (TWC), could lead to the creation of a new competitor in the market.
As part of the deal Comcast committed to divest three million subscribers in a pre-emptive step to appease regulators and ease the controversial deal through.
It may now decide to spin those subscribers off to create a new listed company – which would become the US’ fourth largest cableco – people with knowledge of the matter told Bloomberg.
Comcast has not picked which markets to divest and will not make a final decision on a spin-off for at least three months, the report said.
On Friday the CEO of Liberty Media, the controlling shareholder in smaller cableco Charter Communications, said the company would look at acquiring subscribers being divested by Comcast.
Speaking on Liberty’s Q4 conference call, Greg Maffei said the company would retain flexibility, “both for acquisitions of other systems or potentially, if the Time Warner deal is not able to be completed, looking back at the whole thing”.
Maffei added that the industry was in a state of “flux” and that there could be more consolidation.
Charter had been attempting to acquire TWC in a hostile takeover for US$132.50 per share, before white knight Comcast swooped in with its US$158.82 per share offer – 20% more.
Smaller cablecos Bright House Networks and Suddenlink Communications have also expressed an interest in acquiring portions of the divested subscribers, a source in the report said.
The Comcast/TWC deal will create a cableco with 30 million subscribers, dwarfing the other players in the sector. Cox Communications is the next largest operator, which has around six million.
In spite of the size of the merged operators, experts on the sector who spoke to TelecomFinance last month expected the deal to be approved by the Federal Communications Commission and Department of Justice.
The industry watchers expected the regulators to add conditions to the deal, but did not anticipate any more subscriber divestitures to be required as cablecos don’t compete against one another due to the US franchise system.
