/// Can Cable Consolidation Get Past the Regulators?

November 22, 2013  |  Media Week

Comcast is looking seriously at acquiring Time Warner Cable, multiple reports said earlier today, prompting rapid fluctuations in TWC's stock price, which spiked 9 percent to $132.16 a share this afternoon (the stock was trading below $120 a share as recently as Wednesday). Part of the stock movement has to do with TWC's attractiveness to more than one suitor: backed by Liberty Media, Charter is also looking at acquiring the cable operator. The Wall Street Journal reported yesterday that Charter is close to securing funding for a bid. There's a reason Time Warner looks like the prettiest girl at the dance: it has a full 14.6 million subscribers and it's in hot water with its shareholders as of recently, principally because it lost some 306,000 of those subscribers during its lengthy beef with CBS earlier this year. That cost the company some $122 million, but TWC's revenue is still $2.6 billion —not exactly a distressed asset . As the cable market matures and threatens to shrink , consolidation has become a serious proposition for companies looking to shed money-sucking bureaucracies and pare down infrastructures across as many subscribers as possible. Of course, part of the reason for the existing inefficiencies is that habit larger cable companies have of eating smaller ones, but those little cable companies are like Lay's potato chips : you can't eat just one. (Most recently, TWC gobbled up Dukenet for a $600 million cash deal ) It remains to be seen whether Washington will be excited to see another merger between giant service providers in an industry already criticized for creating regional monopolies. The last time Comcast wanted to do something like this—when it merged with media giant NBCUniversal—it attracted further criticism when, after the deal was approved, then-commissioner Meredith Baker jumped ship to a consultancy job at the newly-formed mega-corporation. If Comcast wants to buy TWC, it's a safe bet that it will have a tougher row to hoe than Charter.

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