While a number of his peers in the media analyst community have begun to express mild doubt about the regulatory fate of the proposed Comcast-Time Warner Cable merger, BTIG Research analyst Richard Greenfield came out Wednesday with the most damning note yet on the deal.
For good measure, he headlined it, "Why we believe the Comcast Time Warner Cable merger will be blocked."
In Greenfield's view, too much has changed in the last year, since the deal was first proposed, regarding the public's attitude toward broadband market power. And he believes regulators will evaluate the combined company's market power based on national implications, not local, which is a decided disadvantage for the two companies.
"After the Comcast-Time Warner Cable deal was announced, it seemed a forgone conclusion to us and the investment community that regulators would take the local approach--leading to the approval of the transaction with an array of strict, but not onerous conditions in a consent decree," Greenfield wrote. "However, a populist groundswell in favor of net neutrality emerged last summer, along with media/technology industry and press noise surrounding net neutrality, peering/interconnection issues and general opposition to the Comcast-Time Warner Cable transaction has brought a whole new level of scrutiny."
Further, Greenfield notes that Comcast (NASDAQ: CMCSA) was, early on, able to steer the regulatory focus onto the MVPD market, for which the combined company would have market control of less than 30 percent. Previous cable mergers had, after all, been reviewed based on MVPD consolidation.
But again, the public's focus has shifted to broadband.
"While Comcast tried to steer the government to evaluate the Time Warner (NYSE: TWC) deal on the old paradigm of video subscriber share, it is increasingly clear that DOJ and FCC approval/denial will come down to how they view the competitive landscape of broadband and whether greater broadband market share serves the public interest," Greefield wrote.
- read this BTIG Research post (sub. req.)
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