Comcast Pulls Plug on Multi-Billion Dollar ‘Monopsony’ Time Warner Merger
After months of anticipation that this mega-monopoly deal would end up on the spike, the collapse is imminent. With so much legal and consumer resistance to the deal, we have to ask why the two giants were so insistent on pressing ahead?
Attorneys who were investigating this attempt at creating a nationwide cable TV monolith knew months ago that the merger would hit the wall with a federal lawsuit. The final rejection of this deal will be a major blow to ambitious Comcast.
When the real ‘regulator rumblings’ began in February, Comcast share prices had dropped 2.1 percent to $58.42, but held steady from there, finishing today at $59.23. Back in February, Time Warner fell 5.4 percent to $149.61, and since then it’s been in steady free-fall, finishing today at $84.88. Now Time Warner is ripe to be scooped-up on the cheap – by someone else?
But this is not so much a monopoly, as it is a monopsony. Reuters explains the difference:
“A monopoly is one seller with many buyers, while a monopsony (pronounced muh-NOP-suh-nee) is one buyer with many sellers. A textbook example is a milk processor that is the only option for dairy farmers to sell to, and that then forces farmers to sell for less.
The U.S. Justice Department’s Antitrust Division is all but certain to examine the potential monopsony power, or buying power, that a combined Comcast and Time Warner Cable would have over media companies that provide TV programming, according to lawyers with expertise in antitrust law.
The combined company would have a near 30 percent share of the U.S. pay television market, Comcast has said, as well as be a major provider of broadband Internet access.”
This story is far from over however. Watch this space to see where this merger story eventually ends….
The would-be landmark $45.2 billion merger between telecommunication giants Comcast Corp. and Time Warner Cable Inc. has fallen apart, according to reports.
Comcast may decide to drop the deal late Thursday, Bloomberg Business first reported during the afternoon, and could officially announce that the death of the deal by the end of the week.
In February, Comcast and Time Warner said that their boards had approved a merger between the two valued at approximately $45.2 billion. Completion of the deal was expected to bring Time Warner’s 11 million television and broadband subscribers with the more than 20 million already under contract with Comcast, the number one provider of those services in the United States.
The merger would have also give the venture control over around 40 percent of the broadband internet service in the US, raising concerns about a potential telecom monopoly. Comcast squashed those concerns by saying the deal would yield “significant consumer benefits” without “any reduction of competition.”
This week, however, sources close to the arrangement told Bloomberg that Comcast was planning on pulling out of the deal amid reports that federal regulators would oppose the merger.
Comcast told the Wall Street Journal on Wednesday that it had met with officials with the Federal Communications Commission and Department of Justice recently, but said “we do not believe it is appropriate to share the content of those meetings publicly.”
In 2011, the paper acknowledged, a planned $39 billion merger between telecoms AT&T and T-Mobile was aborted amid concerns from the Justice Dept. and FC…
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Source: http://21stcenturywire.com/2015/04/23/comcast-pulls-plug-on-multi-billion-dollar-monopsonytime-warner-merger/
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