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Cable Technology Feature Article

October 08, 2014

Comcast Shareholders Approve TWC Merger

By Tara Seals, TMCnet Contributor

Comcast (News - Alert) Corp. investors overwhelmingly approved the company’s planned mega-merger with No. 2 cable MSO Time Warner Cable (TWC). More than 99 percent of shareholders voted in favor of the $45.2 billion deal.

TWC investors are scheduled to vote on the merger this week as well.

Comcast said that it expects the transaction to close in early 2015. But the Federal Communications Commission and the Justice Department are still reviewing the competitive ramifications of the combination, as are state-level regulators. The New York Public Service Commission will vote on the deal on Nov. 13.

If it goes through, investors will receive 2.875 shares of Comcast for each TWC share owned.

Comcast will divest 3.9 million subscribers in a complex deal with Charter as a condition of the merger, bringing its post-merger managed subscriber total to around 30 million, less than 30 percent of video subs in the U.S. Charter would become the nation's second largest cable operator in the United States (up from No. 4 today), with 5.7 million video subscribers.

Even with the divestiture, it would still be a juggernaut in the market: If the deal wins the approval of regulators, DirecTV will stay as the No. 2 pay-TV provider with about 20 million subscribers, followed by Verizon (News - Alert) FiOS at about 16 million. On the broadband front, AT&T would be the next largest broadband provider, with about 16.5 million customers, followed by Verizon with 9 million subscribers.

Comcast does expect a “thorough, a rigorous, and an appropriately critical government review,” according to David Cohen, Comcast’s executive vice president. But, he said that because TWC and Comcast have no overlapping markets, the merger wouldn’t remove a competitive choice from the market, for starters. Also, the deal would extend the Net neutrality (News - Alert)-based ISP rules that Comcast agreed to in its 2011 acquisition of NBCUniversal to cover what are now Time Warner customers, which is interesting given the recent defanging of the FCC’s (News - Alert) ability to regulate broadband.

Additionally, he noted the sheer size of the company would allow for more R&D investment and technological innovation—and more funding for building out better broadband, and for extending low-cost broadband for the underserved to more regions and cities.

Opponents, however, say that the story is deeper than that, and a company of that size has the leverage to adversely affect workforce dynamics for jobs and salaries, as well as unduly influence secondary markets by way of its ability to buy technology like set-top boxes, home gateways or cloud technology. Essentially, any equipment manufacturer, developer, programmer or other ecosystem player would have to cut a deal with the new Comcast to stay viable. 

Edited by Maurice Nagle

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