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Over the last several months the high profile merger between Comcast and Time Warner Cable has been a major point of interest for analysts, commentators, and consumers of digital entertainment. Currently the primary potential hurdle left for the deal’s completion is regulatory approval with the Department of Justice. Critics argue that this deal, if not opposed by antitrust officials, will lead to a mega-company, resulting in chilling effects on consumer choice and protection. Comcast, however, argues that the two companies do not directly compete in any market –therefore, no consumer will actually see diminished choice as to their cable provider.
Competitors of the two companies are especially concerned with the effects of the Comcast/Time Warner deal. Acting quickly, AT&T and Direct TV–two competing electronic media companies–have announced a combination to shore up their own futures should Comcast obtain regulatory approval. AT&T officials say the $48 Billion dollar acquisition allows them to now bundle phone, TV, and internet services for consumers. Further, by purchasing Direct-TV–the nations largest satellite TV providers–the conglomerated company will have more leverage when negotiating with content producers. This is key when considering just how much clout the new Comcast/Time-Warner will hold.
The AT&T deal, like the Comcast deal, is of such a large magnitude that regulatory approval will again be a potential issue. However, many analysts expect this deal to receive less pushback from regulators than one might think because it effectively raises the caliber of the competition for the new Comcast-TimeWarner company. The need for increased competition, for competitors to “keep up with the Joneses,” makes it easier to justify a new conglomeration. In fact, some analysts assert that this AT&T deal will have a similar effect on the regulators assessing Comcast. They argue that it will be easier for regulators to approve the questionable Comcast deal now that larger and more formidable competition exists.
It is interesting to note that neither of these deals include a traditional breakup fee which would entitle the buyer to recoup costs and expenses should regulatory approval be declined. Perhaps both companies remember the AT&T/T-Mobile deal in which AT&T had to pay $6 Billion after failing to persuade regulators.
Do you think either or both of these deals will survive regulatory approval? Do you think they are good deals for consumers, or will the conglomerations result in higher prices and less choice? Let us know in the comments!
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