The word on the street is that the Comcast acquisition of TWC marches forward and will be completed by the end of 2014. TWC sent a letter (email) to subscribers last week, signed by CEO Robert D. Marcus, promising that the “merger” will benefit existing customers:
“The combined company will innovate faster and deploy even better products and features, including a superior video guide, faster Broadband Internet speeds and even more WiFi access points so you can access the Internet wherever you go. “
It would have been more comforting if Mr. Marcus had put in a word about rates staying the same – he did not.
Part of this “merger” requires that Comcast divest itself of 3 million subscribers in order to stay under 30% of the whole market. Some of today’s customers will have to be sold off to another provider and this may be one of the most challenging parts of the deal. How will Comcast select 3 million subs and who will take them?
TWC vs Comcast by Mosaik Solutions and NYT The Comcast-Time Warner Deal, by the Numbers 2-13-14.
TWC has major operations in Texas, Southern California, the Midwest, and the Carolinas. Comcast surely will try to keep these systems whole, especially since they can be combined to adjacent Comcast entities. For example Comcast has most of northern California, and operates in Houston.
The easiest candidates for divestiture might be the existing TWC systems that aren’t part of the major metro clusters that Comcast will desire. Here some candidates with numbers where I could find them. If I don’t have TWC numbers I give “households”. Assume TWC cable subscribers will be some small fraction of this household number.
TWC Kansas City: 970,069 households. KC is isolated but oh it’s right there in Google Fiber land. TWC might hesitate to walk away from the heat of the battle.
TWC Hawaii (Oceanic): 350,000 subs. There is no dispute that Oceanic is isolated by all that Pacific ocean between LA and Honolulu. TWC Oceanic has a reputation for being the rogue of the family and might not mind reverting to just Oceanic Cable.
TWC Kentucky, Indiana, Ohio: 750,000 subs. This would mean undoing the 2011 Insight acquisition.
TWC Lincoln Nebraska: 103,546 households. This might be one of the easier choices.
TWC Maine: 196,669 households in Portland Maine MSA.
TWC Dothan and Enterprise, AL: about 32,000 households combined.
TWC Coeur d’Alene, ID: 18,395 households.
To get to 3 million Comcast might have to “cut the cord” so to speak on some existing Comcast subscribers. Comcast has some service areas in the middle of the country that might be sacrificed. Places like Salt Lake City, Albuquerque and Little Rock. Even so I’m not sure these can add up to 3 million. And if they don’t Comcast will have to make some more drastic sacrifice of a major metro area.
Who will take them?
Some have speculated that a new company could be spun off. If so this new operator of 3 million would be the 9th largest just behind Cablevision. But that seems complicated and unnecessary. There are cable operators that don’t mind having disparate systems around the country. Once Comcast assembles the list they will probably go up for sale to the highest bidder.
This is no easy exercise. I do think Comcast will look to keep the major metro clusters together, especially Texas and the coasts. It will be fun to watch – stay tuned.