By: Ajené Robinosn
Comcast is set to
announce on Thursday (3/20/14) that it will be acquiring Time Warner Cable in a
deal worth $45 billion. The acquisition of Time Warner Cable will be the 10th
largest merger in U.S. history. Comcast, which is the largest cable service
provider in the United States with over 20 million subscribers agreed to pay
$158.82. This is roughly $30 more that the offer by Charter Communications that
Time Warner Cable denied. Time Warner Cable, which has been independent from
Time Warner since 2009, is the second largest cable provider in the country,
with around 11 million subscribers. Due to this fact, the merging of these two
companies will leave Comcast as the cable provider of around 30% of the United
States. These staggering figures raise many eyebrows and have people asking the
questions, is Comcast slowly becoming a monopoly, and should the Government
step in?
As in any major merger the government has to
analyze the specifics and regulate what is exactly going on, and in this case
is about projected to take a year to do so. The government must keep the customers
in mind when analyzing the effects of this deal. Many customers are afraid that
Comcast is becoming a monopoly because they are literally buying out their national
competition. When it comes to specific city competition Time Warner Cable and
Comcast rarely compete for subscribers. Therefore, with this merger, Comcast is
tapping into markets where they don’t have subscribers, like the city of New
York where Time Warner Cable is the only good source of cable TV. This demand
can cause Comcast to raise the prices of their service to increase their
revenue. They can do this knowing that either the consumer probably won’t find
another sufficient cable provider. Cable customers will be forced to look to
other non-cable media providers like Netflix, or Hulu (which are greatly
increasing in subscribers).
Also, the merger makes
Comcast more of a giant in terms of channel deals. With the increase in market
share Comcast has more leverage in buying and negotiations of cable channel
owners like Walt Disney Company and Time Warner. This much pull in the cable
industry may be too much power for one company. With their next competitor
(AT&T U-verse) being 1/5 of their post-merger size there seems to be no
stopping Comcast right now.
Good post! - Comcast intern
ReplyDeleteUse what you got to dominant the market. Comcast has the perfect strategy in mind. As far as other cable companies, they need to step their game up to stay afloat. I personally don't have Comcast, but might reconsider depending on the new things they bring to the table.
ReplyDeleteYou cannot separate the government from corporations when these corporations own the government. The larger "free market" becomes, the less freedoms citizens will enjoy. The best service providers are the only service providers. Even now, Comcast is requiring Netflix to pay for the extra bandwidth that Netflix subscribers use to stream media.
ReplyDeleteFrom a business standpoint what Comcast is doing is reasonable. They have the money and power to take control of the cable market, therefore it is the responsibility of their competitors to change their strategies in order to recapture some of the market share that they have lost to Comcast. As of now I think that it is still too early to call this company a monopoly, the government cannot intervene unless they have evidence which is hard to come by on the spot. However, I am sure that if Comcast continues to snatch up companies they will be investigated and broken up in the near future.
ReplyDeleteIt was great reading this post. I worked for NBCUniversal at CNBC this past summer as a FP&A Financial Analyst. Comcast, who already had owned 51% of NBCU, purchased the additional 49% from GE in 2012 and become the complete owner of the entire NBCU's portfolio including all television networks, theme parks, studios, properties, etc. I think Comcast it expanding, but they are created cutting edge technologies, like the Xfinity app that allows you to watch almost any tv show on your mobile phone, tablet, or laptop. I would say customer satisfaction is where they fall short compared to competitive cable providing networks.
ReplyDeleteIt sounds like Comcast is taking the Google approach when it comes to dominating their market. What i mean by that is buy buying out competitors like Time Warner cable they eliminate competition and expand at the same time. It will be interesting to see how this will fair with other online based competitors like Netflix and Hulu which cater to a much larger crowd than Comcast.
ReplyDeleteThis is an important topic in today's market seeing how large companies in certain markets seem to be gaining more and more power. There is always the fear of greed by these companies as they start resembling a monopoly over time in their specific industries. However, even with the merger the percentage of people using Comcast would still not be large enough to spark a massive investigation. It seems that they are also simply just taking advantage of a great business opportunity and tapping into areas with prospective customers. I think we shall wait and see where Comcast and this merger goes in the near future before tossing the red flag immediately.
ReplyDeleteComcast has a good strategy there approaching. when there is a opportunity to take you to next level in the market you act on it and expand your brand from there. Comcast competitors are going to have to take a different approach to keep there companies at an high growth rate
ReplyDeleteAlthough most people would initially say they are in favor of free markets, this is an excellent example of why SOME government intervention is needed.
ReplyDeleteThis was a solid article with loots of great points. Comcast is constantly growing, I don't know if government intervention is necessary yet though. Making sure different checks and balances are kept in place to prevent it from being a a monopoly has to be arranged though.
ReplyDeleteComcast is doing excellent in the market. With this opportunity Comcast continues to stay the number 1 cable provider. I do feel the government will step in some way because Comcast will have to much power in the future.
ReplyDeleteI think this is one of the smartest move comcast has made in a while because what they are doing is buying out competition and making themselves a bigger giant in the industry. But this is not always good because too much power in the long run can be abused and my cause a spike in prices later down the road. But I think if it gets too big the government will start cap certain prices etc.
ReplyDeleteI think that this was inevitable with online courses. It is imperative that the integrity of these classes be maintained so cheating must be eliminated. I do believe that students will eventually find away around it though.
ReplyDeleteI do not believe that Comcast will become a monopoly from their recent merger and acquisition activity. However, I do believe that the move by Comcast to search for ways to increase market share via M&A will lead to other big players within the industry to search for similar transactions, causing consolidation within the market. We see similar plays in industries such as alcohol, where there are only 4 major players. In the end, the main goal is shareholder return, which will be produced through Comcast's recent deal.
ReplyDeleteThese are smart business decsions by Comcast, however, as a consumer it is evident that customer service and quality of products are still suffereing compared to its competitors. In most cases, based on where you live, Comcast is the only service provider, which limits your ability to use a different service provider.
ReplyDeleteI think Comcast has a very good marketing team. This blog is a good read and has a lot of great points.
ReplyDeleteComcast is following in the footsteps of a lot of big companies. A great example would be Disney, because they are known for buying out well established companies. Some would say that it can hurt the market, but it can also help it. Give a smaller companies access to your resource can make it grow.
ReplyDelete