TWC, Comcast and Charter: Merger Mania Nightmare

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For some time now we’ve been hearing about plans for Time Warner Cable to be sold to either Comcast, or Charter or both. The very latest news has Charter (#4) going in alone to buy TWC (#2). This raises some interesting questions about who would  be the winners and losers if this transaction gets approved.

End of an era? photo: Consumerist Dot Com on Flickr

End of an era?
photo: Consumerist Dot Com on Flickr

The Cable customer – not much change, we hope.

In my humble opinion, TWC is run a lot better than Charter. At the very least TWC never filed for bankruptcy, as did Charter in 2009. If I were a TWC customer (and that is where I get my internet),  I’d prefer that TWC buys Charter, not the other way around.  And from what I have experienced in the past TWC offers better customer service than Charter.

In any case this doesn’t change the competitive landscape much. Cable operators don’t compete with each other today, or in cable terminology, they don’t “overbuild” each other. So if you live in San Diego, just as an example, your cable provider choices today include TWC, AT&T, Dish and DirecTV. If Charter takes over, you still have four choices.

 

Charter/TWC Employees – not good.

TWC has been reorganizing and reducing employees at a frenzied rate, perhaps in preparation for a sale. The inside joke is that TWC stands for “This Week’s Change”.  When the two companies combine there will no doubt be further consolidation of management. Presumably the new headquarters would be in Charter’s St. Louis, even though many TWC employees have been recently redeployed to North Carolina where many of TWC’s corporate personnel reside.

 

The Cord Cutter

This might be a who cares for the cord cutter.  The trend however is important. Had Comcast instead acquired TWC the resulting power house would have been scary.

 

The Stock Holder

Clearly the only reason to combine the companies is to make money for the investor. And will it? Using simple math the combination takes Charter from #4 (excludes satellite) to #2. Including satellite operators, the new Charter company moves up the scale to #3. leapfrogging over DISH. If the new company with 16.3M basic subs can take over with no major hiccups that’s a big overnight growth spurt.

 

Charter's stock CHTR 2013

Charter’s stock CHTR 2013

 

One caveat from history however.  When Comcast and TWC agreed to split up troubled Adelphia back in 2005, the  effects of the so called “integration” were not pretty. One interesting fact about cable operators, is that network designs between any two given MSO’s could be completely different. Switching over millions of subscribers from one network to a new one can be a nightmare, and that’s what happened in Los Angeles in 2008 –  major outages resulted to the benefit of DirecTV who picked up many unhappy  TWC (former Adelphia) customers. If Charter wants to be successful, they should learn from this bit of history.

 

 

 

 


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6 Responses to TWC, Comcast and Charter: Merger Mania Nightmare

  1. Joe says:

    Isn’t it true that Charter has bandwidth usage limits for the month vs. TWC which does not? If this is true, this is a major deal to cord cutters. Streaming HD can quickly eat up the total bandwidth.

    • Len Mullen says:

      Bandwidth is always an issue for OTT’ers. If you rely on the internet for entertainment, you will be disappointed. If you rely on an internet that is provided by a company that makes money selling entertainment, you will be very disappointed.

      Cable cutters should first and foremost look to broadcast tv for entertainment. If that does not work or if it is insufficient, seek out an ISP that doesn’t also sell entertainment and get some assurance of performance before signing on.

      Comcast knows how to beat OTT — it’s called QoS.

      • Joe says:

        I don’t think you understand. I am not talking about QoS. There is a total number of bits you are allowed to download per month before you reach a cap on Charter. Currently, TWC does not have such a cap. Thus, if Charter buys TWC, TWC customers will have to worry about how many Gigs they download per month.

  2. Len Mullen says:

    I do understand and that is one limitation. The other is how well you can stream. If your ISP sells TV, telephony, and internet access, they can assign a priority to voice and/or data with video being a low priority. If they do that, it doesn’t matter that you are uncapped. Netflix is going to be terrible from the first bit to the last.

  3. Len Mullen says:

    I use Fairpoint. When I was looking to reduce my cable bill, I went through the whole bundling dialog. I had also received ‘information only’ emails when we streamed too much on our ‘unlimited’ internet access. It was obvious to me that it was not in Comcast’s interests to provide me with a good OTT experience. Fairpoint sells telephony and internet access. They don’t care where I get my entertainment or what I use my bandwidth for as long as the checks don’t bounce.

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