Comcast’s Bold Bid: Brilliant or Betrayal?

Hello guys, herewith my first dispatch from my new web-work: With a special thanks to, and special regard for, the Fox Business Network for three fun years and lots of learning.

Some rights reserved: Comcast public relations

Let’s admit it: No one reads “all” of anything anymore, nor wants to do so. It isn’t that we don’t have the time, it’s that we don’t make the time. So here are a few fast, quick thoughts on Comcast’s $45B bid for Time Warner Cable, one of the biggest media deals in years. In fewer than 600 words.

What to Watch For…

  • How could the Obama posse okay this deal? When it vetoed, as anti-competitive, the perfect merger in wireless: #2 AT&T’s bid to acquire #4 T-Mobile and its seamlessly compatible network? Now #1 in cable may be allowed to buy #2? Must be new math.
  • Answer may lie in government meddling in the cable business—to favor Google’s YouTube (Eric Schmidt, friend of Obama) and Netflix in their dealings with cable giants. By letting Comcast go ahead, the FCC wins concessions by Comcast to let the agency dictate pricing and traffic policies—an overstep of legal authority that has been struck down twice in federal courts.
  • Never mind that the feds have no dog in this fight. If Comcast blacks out Netflix, millions of customers can switch to Verizon or AT&T, or DirecTV or Dish, or go for Internet-only.
  • What will John Malone do? He was force behind small-timer Charter’s lower bid that put TWC into play. CHTR had approached Comcast on a joint bid. Betrayal! Will Comcast sell 3M cable homes to him at cut-rate price, to buy peace? Or offend one of the smartest, shrewdest executives who built the cable business?
  • What other deals might this merger spawn? Seems unlikely Charter itself will stand down: Malone sees a need for scale & consolidation. Possible deal with Cox of Atlanta? Or with Dolans’ Cablevision “on” Long Island? Cablevision a much better-run shop vs Charter.
  • A deal between DirecTV and Dish? Or AT&T and DirecTV? Former chairman Ed Whitacre when he was at AT&T told me Charlie Ergen’s Dish would be a great buy someday… or DirecTV.
  • And what about Verizon? It spent $20B building out that video-network as a way to save old-phone biz & stave off cable incursions. Yet it’s spending over $100B to buy rest of wireless biz from Vodaphone. Spin off the video business! Betcha Charter might buy it.
  • What will this mean for Netflix? Oh, who cares! Netflix shares could surge up next week: “House of Cards” season #2 will be posted tomorrow on Valentine’s Day—all 13 new episodes, on a snowy weekend for much of the nation. Expect press release on surging binge-viewing. Mine included. After which Wall Street bumps up stock as only real pure-play on Net-streaming revolution.

Never mind that in Q4 on over $1B in revs, NFLX was able to set aside “free cash” of only $7M. Only seven bucks on over $1,000. If you had that business on eBay at home, would you consider it a success?

But I digress…

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