On February 13, Comcast announced a merger with Time Warner Cable. In the merger, Comcast will acquire 100 percent of Time Warner Cable’s 284.9 million shares outstanding for shares of Comcast which comes out to about $45 billion. In order to stay within the FCC’s vacated horizontal ownership line of 30 percent; Comcast will divest about 3 million existing TWC subscribers.
Upon the announcement of the merger, much speculation arose as to what this would mean for competition in the marketplace. Considering that these are the two largest cable providers in the U.S., it made sense to question it but when looked at closely this deal actually benefits the consumer in the end. Right now, Comcast and Time Warner Cable do not compete as they both serve separate geographic regions. So, by merging the two companies, competition will not be reduced and neither will consumer choice. By merging with Comcast, Time Warner customers will have access to access to some of the best in innovative products including Comcast’s cloud-based X1 Entertainment Operating System.
Since this is a merger that maintains the fewer than 30 percent horizontal ownership line, the competitors that compete with Comcast and TWC will not face any more competition than they already do. If anything this merger will further increase competition and spur the kind of innovation that is rapidly occurring the marketplace.
Another important thing to consider about this merger is Net Neutrality. Despite being struck down in by the U.S. court of appeals earlier this year, Comcast agrees to obey the Net Neutrality rules and treat all online traffic equally and not just favor its own video traffic. This decision came out of the 2011 merger with NBC Universal where this was a term of the acquisition being approved by the FCC.