One reason that it is prudent to not get too excited when a merger or acquisition is announced is that it will be a long time before it closes. Another reason is that it may not close at all.
I made this point last week when discussing Nokia’s planned acquisition of Alcatel-Lucent. That is a big deal—if it happens.
But perhaps the biggest deal of the decade in the telecommunications sector is the acquisition of Time Warner Cable by Comcast. That deal was announced on February 13, 2014. Fourteen months later, it seems closer to being scuttled than consummated.
Reuters and other sites reported on the Wall Street Journal’s story from the weekend that said executives from the two cable companies and officials from the U.S. Department of Justice will meet tomorrow to discuss the problems with the deal and possible solutions. The surprising thing is that this meeting is the first between the principals and the DoJ.
The concerns about the deal focus on the leverage of the combined company over broadband and programmers. The tea leaves are subtly saying that the deal may not survive, according to Reuters:
In its report on Saturday, the Journal said the Justice Department and the FCC were nearing the final stages of scrutinizing the deal. Discussions on potential remedies to concerns would be an indication that the two agencies had not yet made a firm or final decision on the merger, the paper said.
The idea that Comcast/Time Warner Cable is in deep trouble is more explicitly explained in a Bloomberg story from last week. Indeed, the likelihood is that it will be disallowed. DoJ officials are “nearing a recommendation to block” the deal and attorneys with the agency are “leaning against” the merger, according to the report.
Bloomberg says that the Federal Communications Commission (FCC), which also must sign off, is not negotiating with Comcast. This can be a sign that a negative decision already has been reached or that the FCC is waiting for a court decision on how much programmers must divulge about their contracts with the two multiple service operators (MSOs).
The story also points out that two things may happen if the Comcast acquisition of Time Warner Cable fails: Bright House Networks’ merger with Charter, which was announced last month, could be abandoned and cable pioneer John Malone may swoop in and attempt to acquire Time Warner Cable.
Comcast executives have worries beyond the folks in Washington, D.C. Last week, the LA Times posted a story about public demonstrations outside a California Public Utilities Commission hearing on the deal. The opposition quoted in the story came from members of the Latino, creative and related communities. The California PUC would have to approve Comcast’s assumption of licenses held by Time Warner Cable and Charter to take over operations of systems belonging to the respective companies.
Comcast’s acquisition of Time Warner Cable eventually may be allowed to go forward. At this point, though, it is a deal that is in deep trouble.
Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at [email protected] and via twitter at @DailyMusicBrk.