In an attempt to placate the FCC, DoJ, FTC and basically every government agency on earth against their acquisition of Time Warner Cable, Comcast has announced that they will be divesting 3.9 million subscribers from the potential Comcast-TimeWarnerCable merger. This new announcement is a huge farce on the part of Comcast attempting to make it look like they’re seriously divesting from certain markets and giving subscribers to Charter. When in reality this new deal they are proposing actually muddies the waters further than a straight Comcast-TimeWarner acquisition and lines Comcast up for a quiet re-acquisition of those 3.9 million subscribers as well as “New Charter” which will be a new version of the current Charter Communications that will be eastablished to enable this deal.
Time Warner will divest 1.4 million of their video subscribers to “New Charter” which will 100% own the old Charter and 33% of the “SpinCo” which is going to be a publicly traded company that will take on the 2.5 million video subscribers that Comcast has “divested” from, even though 77% of that “SpinCo” remains to be accounted for by Comcast and how much of that remainder they will own. They also haven’t said how much they will be selling these divested customers to the “New Charter” for nor how much of a stake in SpinCo they will have, which i suspect will be bigger than anyone wants to believe. I suspect that Comcast will take a fairly large share of this new “SpinCo” even though Charter will be contracted to operate it and hold 33% of the shares.
This is all being done by Comcast to reduce their overall subscriber base numbers to levels that make them appear smaller and less monopolistic even though the land line internet services are much more important to us and the future of the company. They are not talking about internet subscribers whatsoever but rather video subscribers, which, if you remove 3.9 million from a unified Comcast-Time Warner merger, would bring the new company down from about 33 million to 28 million, a mere drop in the bucket of around 11%. This is merely a symbolic gesture on the part of Comcast to placate the regulators that say that Comcast and Time Warner Cable need to divest in order to be able to move forward with the acquisition. In my eyes, no divestment is good enough to allow the two companies to merge, especially knowing Comcast’s behavior with competitors like Netflix. And the weirdest part is that their plan to divest of the 3.9 million video subscribers would ultimately create Charter as the second biggest cable operator in the nation after Comcast-Time Warner Cable and they would have a pretty significant hand/stake in that venture’s creation, meaning that they wouldn’t have much trouble gobbling it up if they felt like it.
All of this stinks really badly and I simply don’t see how consumers stand to benefit from this acquisition whatsoever. Sure, it furthers Comcast’s thirst for acquisition, more subscribers and more growth as well as Time Warner Cable’s desire to be bought out by someone bigger so that they can move on from their ‘skimpy’ profits. It also satisfies Charter’s desires to expand as they were once a suitor of Time Warner Cable, prior to Comcast, and now they get 1.4 million of Time Warner Cable’s subscribers AND they also get to manage 2.5 million of Comcast’s ‘SpinCo’ new cable operator entity. So, yes, the companies will be happy, but they will ultimately screw the customers more than anything else and this complicated deal serves no real benefit other than scale to Comcast. Their plans to divest are merely a bone to throw to the regulators so that the regulators can say that Comcast made an effort to be ‘fair’ and balance out the market power across the market even though Comcast + Time Warner Cable would still be more than 4 times bigger after the plan to divest as their next biggest cable competitor.