Time Warner Cable CEO reiterates confidence in Comcast deal
Despite criticism from media giants and some lawmakers, Time Warner Cable's CEO Rob Marcus thinks his company's $45.2 billion deal with Comcast is a slam dunk.
Time Warner Cable CEO Rob Marcus reiterated his confidence in getting regulatory approval for the $45.2 billion deal with Comcast, and he explained that Time Warner Cable shareholders and customers will both benefit from the deal.
Speaking at the Deutsche Bank Media, Internet & Telecom Conference in Palm Beach, Florida on Wednesday, Marcus said he expects the deal to close by the end of the year. And he didn't express any worry that regulators would take issue with it.
"I have every confidence that the deal will close," he said. "We wouldn't have signed the deal if we didn't think it would get done."
Still, others have suggested that the fact that Comcast and Time Warner Cable are the two largest cable operators in the country could concern regulators. Speaking at the same conference on Tuesday, Fox President and Chief Operating Officer Chase Carey said he was concerned that the combined cable company would control too much of the broadband infrastructure across the nation.
Time Warner CEO Jeff Bewkes, who also spoke at the conference Tuesday, also expressed concern and predicted strong government scrutiny of the deal.
"In the longer run there are some questions on competition that any deal like this will look at, the government will look at and make sure the appropriate conditions are in place to optimize competition," Bewkes said, according to a report by Reuters.
Marcus shrugged off such predictions and said he believes the deal will be straightforward for regulators to evaluate and approve.
"We don't compete with Comcast in any market," he said. "So when you start with that as a premise, it's hard to envision it won't get done. "
But some lawmakers on Capitol Hill are adamant that the merger is bad for consumers. On Monday, Sen. Al Franken (D-Minn.) said on "CBS This Morning" that he does not buy the cable companies' claims that since they don't overlap in any market that the deal won't affect competition.
"I'm laughing because we're supposed to take great comfort from the fact that this is the No. 1 cable company and the No. 2 and they don't compete in any market, so they're saying you should be happy that we have these monopolies and now we're going to be one company with twice as much of a monopoly," he said, according to a Variety article.
This is no AT&T/T-Mobile repeat
Indeed, this has been the main argument that both Comcast and Time Warner Cable have tried to drive home. Cable operators by design are monopolies in their markets. When the cable systems were originally built, they were granted exclusive franchise rights in particular geographic areas. It's only been in recent years that so-called "over-builders" have been permitted to come into some regions to provide alternative networks. Still, none of the major cable operators have built networks in territories served by other cable operators. Instead, companies, such as Comcast and Time Warner Cable, have grown through acquisition.
Marcus emphasized that this fact alone sets the Comcast/Time Warner Cable merger apart from another megamerger in the wireless industry that was rejected by both the Federal Communications Commission and the Department of Justice. In 2011, these agencies put the kibosh on a $39 billion deal that would have combined AT&T and T-Mobile USA. The FCC and the DOJ each cited concerns about harming competition when opposing this merger.
But Marcus argued that the Comcast/Time Warner Cable deal looks nothing like the failed AT&T/T-Mobile.
"There are no similarities between the AT&T and T-Mobile deal with our situation," he said. "In that case you had two direct competitors. That is not the case with this deal. Whether you're talking about broadband or video, we don't compete with one another. So the combination doesn't change the number of competitors in any market."
Marcus also tried to lay to rest any concerns that a combined Comcast and Time Warner Cable would negatively affect programming costs for the rest of the cable industry. He readily admitted that Time Warner Cable and Comcast tend to buy similar or the same content, but he laughed off the idea that a combined company with greater purchasing power would cause programmers to suffer.
"I just find these types of concerns ironic, especially when programming costs in recent years have risen to a level that is greater than what the consumer market will bear," he said.
Marcus also emphasized that he believes the merger will not only benefit the company's shareholders, but also customers.
"This deal truly is a dream combination," he said. "It allows us to innovate at a rapid pace. And the value creation opportunity is huge."
He said the two cable operators are very similar in their philosophy, and their strategies for the future are also very much aligned.
"The reality is that the two companies are more similar than they are different," he said. "We are both focused on customers. And we look forward to exploiting the business services opportunities. And we're committed to innovating on the product side."
Comcast and Time Warner Cable are expected to file documents requesting approval for the merger to the FCC in the coming weeks. At that time, the FCC's 180-day shot-clock used to evaluate mergers will begin. And the public will be given time to comment on the proposed merger. The DOJ's evaluation of the deal will also follow a similar timeline, Marcus added.