He went on to surmise that such a merger would be “the most intelligent transaction they could pursue in an increasingly competitive digital market.”
I disagree with most of what Bazinet has to say here, since he is a Wall Street analyst with a vested interest in pushing for such a deal, even though he is considered a respected forecaster of market trends.
Here are my reasons on why such a deal likely won't happen:
- There's been a sad history of merger disasters associated with large companies, including the Time Warner/AOL deal, which virtually destroyed Time Warner’s shareholder equity position for years. Comcast COO Steve Burke highlighted the issue at a conference last week, offering this statement: "We don't wake up every day saying, 'How do we get bigger in cable?' But if there is a way to acquire cable systems for what we consider to be a good price, ones that are contiguous or well-managed, we would certainly look at whatever was out there."
Comcast, therefore, is searching for a way to increase size and footprint, but only if the price, synergies, and shareholder equity projections are vetted thoroughly. That it's looking for a company with a good contiguous fit could suggest that it might not seek out anything too large, likely ruling out an MSO the size of TWC.
- I am also skeptical of any merger that would put Comcast in a “negative public, shareholder, or government position,” and merging with any company that could:
1. Run high risks, both in price and as a long-term shareholder equity scenario
2. Attract undue negative perceptions from a regulatory and public view
3. Possibly cause thousands of layoffs thanks to expected consolidations
However, Comcast does want the flexibility to grow and to stay ahead of increasing competitor entries within or near its cable markets. Whether that entails acquiring adjacent properties, or merging with the right company, it's difficult to say. One scenario that can be predicted is that they will do it on their own terms.
— Leonard Grace, a cable industry vet, is a telecom strategist and blogger. He can be reached at [email protected]. Special to