If you are following Verizon merger rumors, you may have gotten whiplash Tuesday afternoon. Speculation was high around a cable or content deal involving Verizon, following a report from Bloomberg News that company CEO Lowell McAdam is open to merger talks with Comcast Corp., Walt Disney Co. or CBS Corp.
That report comes only hours after McAdam told CNBC that, despite his stated interest in a cable merger, which he expressed earlier this year, "we haven't seen the architectural fit," nor has Verizon Communications Inc. (NYSE: VZ) found willing partners for a mega-deal. As a result, Fortune Magazine headlined its piece "Verizon Is Not Interested in a Big Cable Merger Right Now."
On close examination, McAdam's comments weren't contradictory -- in one interview, he says Verizon is "open" to mergers, apparently mostly around content, while in another he admits nothing has come together to this point. In the CNBC interview, McAdam focused more on the dense fiber networks Verizon believes it needs to support 5G -- up to 1700 strands per cable, connecting thousands of small cell sites -- and noted that existing cable networks don't have that kind of fiber density, making them less appealing as merger partners for infrastructure reasons.
The continued merger discussion swirling around Verizon is enough to fuel stock speculation and that's the lifeblood of business news organizations like those quoted above. In the last few months alone, Charter Communications Inc. and Dish Network LLC (Nasdaq: DISH) have been mentioned as possible takeover targets. Stocks bounce up and down -- although only a few points at a time of late -- and everyone gets in on the hot talk.
The hype cycle is going to keep churning on this one and it's hard to find fault with that. This industry is in a volatile period, on the brink of so much change and opportunity, but also facing massive pressure to perform and compete. Factor in a regulatory environment that seems much friendlier to big business and there is good reason for merger expectations to ratchet up.
The hard part will be figuring how to keep comments like McAdams made today in proper context. A Verizon spokesman suggested this afternoon that his CEO's remarks are more along the lines of, "we'll answer when someone knocks on the door," -- which is, in fact, a literal definition of "open," after all.
— Carol Wilson, Editor-at-Large, Light Reading