Comcast spent $336 million on failed merger
$336 million – that was the amount that Comcast spent on its failed merger with Time Warner. The deal fell through afterregulatory scrutiny from the Federal Communications Commission and the Department of Justice. The FCC and DOJ were concerned that a merged Comcast/Time Warner would dominate the broadband market, with the ability and incentive to stifle the emergence of online video competing with the cable bundle.
Comcast’s latest quarterly earnings show that broadband is indeed outpacing cable: the company gained 407,000 Internet subscribers and lost 8,000 video subscribers. In the second quarter of this year, Comcast EVP Neil Smit reported that “broadband has indeed surpassed video in terms of the number of [subscriptions].” As Recode writes: “Comcast is now an Internet company.”
However, video remains more profitable for Comcast than broadband. In the last quarter, the company generated $5.3 billion from cable-TV subscriptions and $3 billion from Internet subscriptions. This means that Comcast, despite changing subscription rates, still has an incentive to protect its cable bundle against encroachment by online video streaming.
It’s official: The Comcast, Time Warner deal is dead (Speed Matters, Apr. 24, 2015)
Comcast, Time Warner deal in trouble (Speed Matters, Apr. 23, 2015)
Comcast Spend $336 Million on Failed Merger (DSLReports, May 4, 2015)
Comcast Is Now an Internet Company (Recode, May 4, 2015)
Comcast First Quarter 2015 Earnings Report Transcript (Comcast, May 4, 2015)
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