Charter, Verizon Flirt With Merger, Because Who Likes Broadband Competition Anyway?

from the look-at-all-the-synergies dept

Back in January, Wall Street chatter started to suggest that with Trump being much more friendly to M&As, some previously-unthinkable mergers were in store for the already uncompetitive telecom market. The most commonly discussed is a new merger between T-Mobile and Sprint (regulators blocked the first attempt in 2014 because it would have dramatically reduced competition). But another major rumor involves Verizon acquiring either Comcast or Charter Communications, something that Verizon executives have publicly tried to downplay, but evidence suggests remains high on the company’s agenda all the same.

In fact, a report last week indicates that Charter has already turned down Verizon’s initial offer. The offer — valued at between $350 and $400 a share and well over $100 billion total — wasn’t quite high enough for Charter’s liking, according to insiders familiar with the proposal:

The offer ? valued at between $350 and $400 a share, and well over $100 billion, according to two of the sources familiar with the move ? was rejected by Charter because it was too low ? and because Charter and its largest shareholder, Liberty Media, weren?t ready to sell…Also standing in the way of Liberty Media agreeing to a deal for any of its units is the tax implications, which would be unpalatable to its billionaire chairman John Malone, sources said.

And part of the reason it’s “unpalatable” right now is that the dust still hasn’t settled from the telecom industry’s last horrible merger, Charter’s $79 billion acquisition of Time Warner Cable and Bright House Networks, approved under the Obama administration. That deal resulted in frozen speed upgrades, significantly higher prices and somehow even worse customer service. The end result has been a tidal wave of complaints about the new Spectrum company from consumers across newspapers nationwide, most of them now realizing that, for consumers, such deal “synergies” are often a step backwards.

Verizon’s no stranger to deal dysfunction either, having recently struggled to finalize its Yahoo acquisition after it was revealed the company had numerous hacking intrusions it failed to tell Verizon about during negotiations. And the company’s sale of its unwanted DSL customers in California, Texas and Florida was an absolute, indisputable shit show as the acquiring company, Frontier Communications, repeatedly highlighted it couldn’t handle the massive influx of unwanted, mostly rural, broadband subscribers. It’s also now drowning in debt, with bankruptcy on the lips of many investors.

So why would Verizon, a company with its own mounting debt, already looking to exit the fixed-line broadband business, suddenly want to acquire a cable company? It’s believed that Verizon’s primarily interested in Charter’s fixed-line transit and other core infrastructure as a way to beef up its fifth-generation (5G) wireless ambitions. Of course like all such deals, there’s the added benefit of eliminating a direct competitor in the television and broadband space, reducing the already skimpy competitive options already available in the consumer broadband market.

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Companies: charter, verizon

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Comments on “Charter, Verizon Flirt With Merger, Because Who Likes Broadband Competition Anyway?”

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Anonymous Coward says:

Better customer service, better pricing

I have experienced nothing but improved service since the Charter+TW+Brighthouse merger. My monthly cost is lower, internet speeds are higher, and customer service has been great. I simply switched from Brighthouse to WOW.

I am lucky enough to have 3 cable providers on my street but it is still amazing how little they compete.

JoeCool (profile) says:

Re: Better customer service, better pricing

You have to read his post carefully – he didn’t get better service because of the merger, he got better service because the merger prompted him to ditch Brighthouse for a completely different service (fortunately he actually has multiple choices where he lives) that is much better. So while his better service at a lower prices is THANKS to the merger, it’s not BECAUSE of the merger.

Teamchaos (profile) says:

Not sure about the merger, but Charter delivers...

I get it that the merger may result in decreased competition and all that, but I gotta say that Charter has delivered excellent service. I’ve had other ISPs and Charter has gone above and beyond on every occasion. With AT&T I paid for 18Mbs and only got 11Mbs if I was lucky. With Charter, I paid for 20Mbs and got 30Mbs most of the time. When they came out with Spectrum, they upgraded me to 100Mbs at no additional charge. I usually get 130Mbs on Speedtest.

I know, no one on this board likes to hear anything good about cable companies and I’m sure many will consider me a paid shill for the cable companies, but I gotta be fair and give praise where praise is due.

tweak (profile) says:

Re: Not sure about the merger, but Charter delivers...

Kind of in the same boat here. We were paying for 40Mbs with Time Warner. After the merger, I saw Spectrum advertising 60Mbs for $5 less. I called to switch, and almost noticed that our speed had jumped to 120Mbs on average.
I can’t speak about their customer service, since I’m only had limited interaction with them so far, but my post-merger speed is nearly 3x what my pre-merger speed was, and my bill is basically the same.

Annonymouse (profile) says:

Re: Response to: Ninja on Jun 6th, 2017 @ 7:08am

The only way they could hope to begin to fix their financial woes is to cut those concentrated cost centers that don’t actually add value or produce income directly…..
Hmmm… that would be about a dozen executive positions at most and their platinum handshakes.. I eonder if insurance woukd cover a gas leak in the executive suite? … Chili on the menue?.. oh i know … reorganize right size and put them in customer service with commiserate pay cuts or out in the field pulling wire and digging vaults if the even know what end of a shovel to hold.

My_Name_Here says:

Business 101

You can ask Mike, the natural result of a totally open marketplace is a monopoly. At some point, someone wins, someone loses, and someone buys out the last players.

They aren’t doing anything that isn’t natural. Competition is generally just a step on the way to monopoly status, maintained only through artificial means.

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