Recently, media reports showed that Comcast proposed a $45.2 billion takeover of Time Warner Cable Inc. This takeover would be quite a hefty deal for the market and the government to grasp. Two of the largest cable providers merging just sounds like a deal that the government will sniff out. The FTC, or Federal Trade Commission along with, surprising, the IRS, and sometimes the SEC, will have some report and analyzation of the merger in due time.
My Rant on Comcast
Non business related, Comcast is the provider for my TV and I do enjoy the on demand options, (although the movies I want to watch always have a fee to them) as well as the freedom to watch without weather interference (sorry directTV) Comcast simply is frustrating. Comcast is a monopoly in the cable industry regardless of its merger with Time Warner, Comcast knows that its customers will reluctantly stay with them regardless of the premium they put on for extra channels. They know customers don't want to go through the hassle of switching cable providers and that most customers certainly won't go to satellite providers. So, Comcast has its customers right where they want them; in a struggle of paying big money for more shows or movies. I just can't get over their ridiculous fee that they charge for some of its on demand products.(other than Netflix movies are coming hard to find)All of their "Xfinity" commercials always show the classic "pay for 6 months" fee thats always lower than what you actually end up paying for it in the long run. I'll have to admit, there customer service has gotten better over the years and the monopoly that they have is only going to get grow.
The Growing Diversity of Comcast
Comcast over the years grew from the cable company, to the phone company, to the internet company, and now to the home security company. Its pretty amazing how many aspects of our lives Comcast could cover. Reading some articles that might say how the cable industry is the next to fall is an intriguing topic, but is hard to pinpoint and should be thrown away at the moment. For now, cable companies are still bringing in profit, and are diversifying themselves to reap more profits. Regardless of the fact, many Netflix or Hulu users tend to stray away from normal cable and rely more and more on Netflix. Comcast realized this and so they recently have added a home security component to its already diverse product line. The home security not only adds a different industry to go into, but also adds a mobile perspective that Comcast has been trying to unlock. And so, the growing diversity of Comcast, can only go up.
Will the Merger Happen?
With all of the diversity in Comcast, I haven't even began talking about the merger with Time Warners Cable. This would involve the two largest cable companies and give Comcast a huge boost in its already dominant industry. That just sounds like a no go from Washington. Well the government as I said before, will have some sort of report on the merger and review its eligibility soon. I wouldn't make any promises of this going through just yet. In time, we'll see. The main argument why this just might squeeze by the government regulators is how comcast and time warner do not have any overlapping markets and so customers won't see any changes to their services since they serve different area codes. Many are arguing its in the publics best interest. Still, Washington will needs to overlook the case and make an announcement soon.
All Hype?
There is an interesting book out about mergers by Thomas Straub explaining the failures of mergers. Mergers are complicated, government interference is usual, and they are extensive and sometimes confusing. The main point to look at is how much media covers acquisitions and mergers like dogs chasing a ball, they go after mergers for the sake of a news story. Granted, this merger should be covered and is obviously major news, but there are plenty of mergers out their that have failed by either the government or just simply didn't work out. The successful merger that many point out would be the 1998 merger between Exxon and Mobile to create the giant oil company that is today Exon Mobile. Now I'm not saying that this deal will end up being the next Exxon Mobile and I'm not saying this merger will end up being another failed merger, (unless the government intervenes) I'm just saying from a long term perspective, the deal isn't going to be a gold mine of profit for investors, but watch the deal carefully. Invest with care.
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