**Editor’s Note: Please click
for a recap of the biggest channel-impacting mergers in Q4 2013.**
A pair of major rivals in the channel might soon become allies as their companies prepare to merge.
Comcast, the country’s largest cable operator, has 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.
This combination creates a company that delivers maximum value for our shareholders, enormous opportunities for our employees and a superior experience for our customers,” said Robert D. Marcus, chairman and CEO of Time Warner Cable. Comcast and Time Warner Cable have been the leaders in all of the industrys most important innovations of the last 25 years and this merger will accelerate the pace of that innovation.”
Of course, this deal must pass regulatory muster, which might not be an easy task. Combining the nation’s two-largest cable operators will create a single company that dwarfs the competition in size. The federal government has been wary of big communications mergers such as this in the past just two years ago it put up roadblocks to a merger of AT&T and T-Mobile, the No. 2 and No. 4 telecommunications companies. The main difference here is that the cablecos don’t directly compete against one another for residential customers in major U.S. markets.
Comcast and Time Warner Cable say that the deal “will create a leading technology and innovation company, differentiated by its ability to deliver groundbreaking products on a superior network while leveraging a national platform to create operating efficiencies and economies of scale.”
When rumors of a cable tie-up began swirling last fall, Channel Partners got mixed reactions from agents.
While they saw potential in being able to pitch another large, national provider of fiber and coax services to enterprise and SMB customers, respectively, Curt Allen, president of master agency X4 Solutions, expressed concerns about the type of channel model that the companies would adopt Comcast’s “very small partner base” or TWC’s tendency to extend top status to more partners.
“If the Comcast model prevailed, that consolidation would take on even more scale,” Allen told us in November. “That decreases the number of competitive master agent providers with top-level terms. That, in turn, decreases the options for sales partners/subagents, and limits the need to compete on support and commissions. Seems anti-competitive, potentially.”
Others fear that channel partners might bear the brunt of what could be a complicated integration process.
But Ken Mercer, vice president of sales at Telecom Brokerage Inc., told us that Comcast would bring size, money and marketing, while TWC would offer smooth processes and ease of doing business, creating “an unstoppable communications company with a national footprint to rival traditional telecom companies for WAN technologies.”
The companies hope to close the deal by the end of the year. Time Warner Cable’s stock shot up more than 8 percent in pre-market trading on Thursday, while Comcast’s was down more than 2.5 percent.
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