New Street Research analyst Jonathan Chaplin says it's 80 percent to 85 percent likely that the FCC and U.S. Justice Department will approve Charter Communication's (NASDAQ: CHTR) proposed $56.7 billion purchase of Time Warner Cable (NYSE: TWC).
Of course, analysts were also quoting those types of figures when Comcast (NASDAQ: CMCSA) was in the early portion of its ultimately unsuccessful bid to acquire TWC. Chaplin, however, says the two regulatory processes will be very different.
"We believe the market is doing the opposite of what it did on the Comcast deal," Chaplin told investors. "With Comcast, it underestimated the regulatory risk. With Charter, it is overestimating that risk. We think we have a pretty good idea of why the government rejected Comcast's transaction and that Charter, while raising some similar issues, will not present the same level of harm."
Most notably, Chaplin says, the broadband footprint of Charter-TWC would come nowhere near the size of Comcast-TWC, which would have controlled 60 percent of the U.S. market. But beyond just size of market share, the analysts says Charter has given far less indication that it will disrupt things like over-the-top distribution.
"Not only would Charter's number be significantly below the combined Comcast/TWC number, Charter's statements on a number of issues where the fear of blocking occurred, suggest it understands how it needs to structure its relationships with others to gain approval," he said.
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