Partners React to Comcast-TWC Merger: 'Harm,' 'Mess,' 'Exciting'
Copyright 2014 by Virgo Publishing.
By: Kelly Teal, Senior Editor
Posted on: 02/14/2014


**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q4 2013.**

Early reactions within the channel to the proposed, $45 billion merger of Comcast Corp. and Time Warner Cable reflect a mixture of fear, optimism and "wait and see" attitudes.

The biggest concern among partners appears to pertain to money.

"I think eventually [the merger] will harm the channel in the form of a change in terms and conditions, and compensation strategy," said Curt Allen, president of X4 Solutions.

Michael Bremmer, CEO of, agreed.

"If this [deal] happens, I think it will make offering Comcast more difficult because we will be reticent to sell the new, more powerful company because of fears that our long-term annuity income will be less secure than it was before," he said.

There's additional unease surrounding post-merger logistics.

"Integration of the two companies is going to be a mess," said Brad Miehl, president and CEO of MicroCorp. "So in the short term, things may be status quo, gradually becoming more difficult as integration begins."

Over time, however, Miehl expects that Comcast and Time Warner Cable "should be able to take best practices of each company and create a better experience for the channel and end customers."

Ken Mercer, vice president of Telecom Brokerage Inc., holds a similar view.

"At first I think they will be separate and business as usual," he said. "Then a small period of pain as systems are integrated, but both run regional support programs, and none of the footprints overlap. So it should be a smooth transition."

Steve Braverman, CEO and founder of X4 Solutions, expressed optimism as well. If regulatory bodies approve the behemoth transaction, "it's exciting for the channel and the end-user business because of the increased footprint with one carrier," he said. "And [Craig] Schlagbaum and company have done a tremendous job building and supporting the channel, so the merger will just add to it. No fear."

Meanwhile, distributor Ingram Micro, which sells Time Warner Cable Business Class broadband services through its cloud division, is taking the wait-and-see approach.

"We look forward to understanding how we can leverage the combined Comcast/TWC to provide new and exciting services for the channel," Jason Bystrak, director of sales for Ingram Micro's North America Services Division, told Channel Partners.

If all goes as Comcast and Time Warner Cable hope, though, some sources see some positive outcomes. For Miehl, the merger could increase organizations' proclivity toward using cable network services, since Comcast would boast territory throughout the country – a feat never before achieved by an MSO in the United States. For Mercer, the implication of that expanded territory comes down to revenue: "It will increase due to more multisite sales," he said, since a combined Comcast-Time Warner Cable would be able to serve so many more businesses.

On a similar note, Gary Jacobs, vice president of channel sales for Bridgepointe Technologies, agreed that the pairing is a coup for multilocation customers and, thus, the channel.

"If I had any concerns, it would be more related to the possible decline in the level of customer service, price competition, or product innovation that could occur when a company owns the majority of the market," Jacobs said. "However, I’ll remain optimistic that those things wouldn’t occur."

Shane Stark, general manager and director of IT at Carrier Access Inc., said if Comcast and TWC remain channel-friendly, their pairing "is a good thing." It will mean managing fewer providers for compensation and provisioning, and, with any luck, it will "lead to more consistency in the overall process," he said.

The Agent Alliance, a consortium of partners, also is hopeful.

"Comcast has a robust, channel-friendly program," said Agent Alliance CEO Bill Power. "The increased footprint of a consolidated TWC and Comcast network will be a huge development for the channel and customers. And hopefully other, less channel-friendly providers will feel the heat from these partner-based companies. We’re cautiously optimistic that the merger won’t dilute their commitment to the channel."

To be sure, Comcast and Time Warner Cable will have their work cut out to convince other partners that the union will benefit the channel.

"I don't think this is a win for the channel or the consumer," said Bremmer, adding, "I believe it will reduce commissions and increase channel conflict with the cable companies."  

X4's Allen, too, predicts fallout.

"We have always worried that at some point the cablecos may decide that they do not need to be paying [a certain] percent for business that they think they could get with TV commercials," said X4's Allen. "The consolidation of the two biggest now makes one voice. If Comcast was thinking about reducing comp, for instance, we felt they were less likely to do so with TWC out there doing business as usual, and vice versa. There is a reason we do not focus on the LECs ... and this is the equivalent of an AT&T-Verizon merger."

This week, Comcast, the country's largest cable operator, agreed to buy Time Warner Cable, the second-largest, for $45.2 billion. TWC had turned down a handful of offers from Charter Communications over the past few months, reportedly holding out for an offer from Comcast. Those reports turned out to be true. The companies hope to close the transaction by the end of the year but are almost guaranteed to undergo regulatory grilling. Comcast says it is prepared to divest 3 million subscribers to help offset officials' apprehensions.