Report: Verizon Considering Comcast Merger In Supernova Of Dysfunction

from the bigger-is-always-better dept

Despite Trump's criticism of the AT&T Time Warner merger (largely believed to be due to negative CNN coverage), most Wall Street and telecom sector analysts expect the next few years will see an explosion in previously-unthinkable mega-mergers. Sprint is expected to make another bid to acquire T-Mobile after the deal was blocked by regulators back in 2014. Comcast or Charter are expected to make their own bid for T-Mobile if Sprint can't come up with the cash. Other rumored acquisition targets for giant telecom companies include Dish (and its hoarded spectrum) or any number of massive media empires.

But one of the more unlikely rumored M&As that keeps popping up is a Verizon acquisition of Comcast. The idea was floated by UBS analyst John Hodulik in a recent research note to investors, with Hodulik claiming the deal provides incredible "synergies" while propping up Verizon's fifth-generation wireless (5G) ambitions:
"Densification of wireless networks required to meet the needs of video-centric subscribers increases synergies of cable-wireless combinations and provides the springboard for 5G-based services," he proclaims. "A roll-back of Title II re-classification could further increase incentives for cable," he adds, casually citing the likely dismantling of net neutrality and the FCC under Trump.

He put forth a number of models that include Dish fusing with T-Mobile or other variations. But he noted that a Comcast or Charter merger with Verizon would create "significant synergies" and "integrated products" while being "accretive to revenue and EBITDA growth."
Adding to this speculation this week is a New York Post report claiming that Verizon is looking to acquire either Comcast or Charter:
"Verizon Chief Executive Lowell McAdam may be getting ready to answer rival AT&T’s moves to buy DirecTV and Time Warner. The New York wireless giant is weighing the acquisition of a cable company to help grow demand for its wireless data products, two well placed sources told The Post. The CEO told friends at the Consumer Electronics Show in Las Vegas earlier this month that he wants to buy into cable, one source said.

"They need it for 5G,” said a second source, confirming McAdam’s interest. The most likely targets would be “Charter or Comcast,” the source noted."
The problem is the deal doesn't make a whole lot of technical sense given the companies' dramatically different networks. Verizon has no shortage of core network transit capacity to fuel its own 5G ambitions. And while the cable industry's large network of WiFi hotspots could be used to offload 5G wireless users, Verizon has actively been trying to get out of the fixed-line broadband business. The company has largely frozen its FiOS fiber expansion, and has spent the last few years actively trying to drive away DSL customers it doesn't want to upgrade. Verizon's trying (with mixed results) to pivot to media and advertising.

While Verizon may be interested in NBC, would it saddle itself with tens of millions of new residential broadband customers just as it's trying to back away from the saturated residential broadband market? A more likely effort would involve the "smaller" acquisition of a pure media company like CBS to keep pace with AT&T's $100 billion Time Warner bid and Comcast NBC Universal. Verizon's own streaming service is being called a "dud" by the company's own advertising partners, and owning a richer catalog of original content would go a long way to prop up Verizon's goal of becoming a Millennial advertising juggernaut.

Much of the chatter could simply be Wall Street cashing in on rumor-triggered telecom stock movement. That said, the competitive repercussions of fusing two of the biggest broadband providers and reducing competition further would be monumental. Whether a Verizon Comcast superunion happens or not, it's becoming incredibly clear that Wall Street believes we're entering a new era of rubber stamp regulators, where no deal is too big, and the consumer impact and employment toll of these kinds of megadeals is only a distant, fleeting afterthought.

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  • identicon
    Anonymous Coward, 18 Jan 2017 @ 6:30am

    That's one way to beat the competition for Worst Company Anywhere - buy them.

    reply to this | link to this | view in chronology ]

  • icon
    discordian_eris (profile), 18 Jan 2017 @ 6:35am

    Sigh

    I guess that Verizon simply wants the title of the most hated company in America. Rather than work hard, fuck over everyone and everything around them, they are going to do it the easy way. Just buy there way to the top.

    On a more serious note, a wave of mergers of the like not seen since '96 or so is not what anyone needs. Time has shown that these mega-mergers do nothing but make a lot of money for a few big shareholders and destroy value for all of the others investors.

    reply to this | link to this | view in chronology ]

  • icon
    Lord Lidl of Cheem (profile), 18 Jan 2017 @ 6:39am

    Do it!

    If the duopoly were to become a monopoly a whole host of new options to help the consumer would become available.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jan 2017 @ 6:43am

    Wired broadband duopoly

    There are quite a few markets in which FiOS and Comcast are the only major ISPs. That alone could make this a pretty profitable merger (and that alone, if antitrust laws still exist under Trump, should prevent it).

    reply to this | link to this | view in chronology ]

  • identicon
    Sasparilla, 18 Jan 2017 @ 6:45am

    No we don't want this

    Comcast is a terrible company, but letting Verizon (an even more morally corrupt company) take them over would be horrible.

    The main reason being that Verizon has a clear motive and history to move customers to wireless (and deny others from getting landline connections / its example with DSL/Fiber) - because wireless data costs many times what it does via a wired connection.

    Add to that with Verizon being one of the pair of companies (AT&T the other) that willfully participates in mass surveillance of its customers with the U.S. government at a level few companies choose to go (Microsoft is probably the close). We don't need to give these guys the keys to the internet for the biggest fast landline ISP in the U.S.. JMHO...

    reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 18 Jan 2017 @ 6:45am

    Aha.. Buy n' Large. Or Vericast. or Comizon.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jan 2017 @ 6:53am

    "hoarded spectrum"

    Made possible by the FCC. What do you want to bet that this is one function of the FCC that Trump *won't* kill off?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jan 2017 @ 7:10am

      Re: "hoarded spectrum"

      Yes & Yes.

      I have been telling these clowns that regulation will only get them what they are trying to avoid but they won't listen.

      When it comes to government... before you deign to give YOUR man/woman power... think instead if you want your opponent to have that power. If people did this more often they would not have been so stupid as to vote in Bush Jr, Obama, or Trump. But hey... who am I kidding here!

      Every Nation gets the Government it Deserves.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 18 Jan 2017 @ 11:29am

        Re: Re: "hoarded spectrum"

        "I have been telling these clowns"

        Need not read any further.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 18 Jan 2017 @ 1:05pm

        Re: Re: "hoarded spectrum"

        "Every Nation gets the Government it Deserves."

        Then what are you whining about? You're getting what you deserve. Now, sit down, shut up, and stop bothering the adults.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jan 2017 @ 7:02am

    I've never heard so much marketing buzzword bullshit in one statement.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jan 2017 @ 7:32am

    Telecommunications Act of 1996

    Look it up. Passed by Bill Clinton to allow telecommunications companies to consolidate. It's all been downhill for the media since then, with all the consolidation.

    reply to this | link to this | view in chronology ]

  • identicon
    Wendy Cockcroft, 19 Jan 2017 @ 2:20am

    Boycott or bend over, right?

    I'm surprised that our resident anarchist troll hasn't hopped in to instruct us all to either do without internet or accept the deal in the name of the free market.

    This kind of mega-merger is antithetical to a free market. "Free" does not mean "take it or leave it, peasant."

    Well, if it happens, I look forward to...

    ...oh, wait. LOL!

    Meanwhile, RE: "very nation gets the government it deserves," we need to stop pretending that corporations and our governments have merged such that corporations are running the government.

    There is not a market-based solution to this, but we should be absolutely on the phone to representatives and writing to them, etc. Unless we are willing to hold their feet to the fire over things like this, expect it to get worse.

    Mr. Every nation..., please choose a nickname to use while posting. We've got a lot of Anonymous Cowards here. I recommend providing links to campaigns or consumer protection groups for people to join if you want to encourage people to be more actively engaged with their glorious leaders and therefore "deserve" a better government. That would most likely convince us to take you more seriously.

    reply to this | link to this | view in chronology ]


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