Comcast Offers To Shed 3.9 Million Subscribers To Ease Cable Deal

An anonymous reader writes "In a bid to win regulatory approval for its proposed $45 billion takeover of Time Warner Cable, Comcast has offered to sell 1.4 million pay TV subscribers to Charter Communications for $7.3 billion. From the article: 'Comcast also said it would divest another 2.5 million subscribers into a new publicly traded company, dubbed SpinCo for now, to be one-third owned by Charter and two-thirds owned by Comcast shareholders. The deal will make Charter — whose own bid for Time Warner Cable was thwarted by Comcast's higher offer — the second-biggest U.S. pay TV company with 5.7 million customers, overtaking Cox Communications Inc.'"

Comments

Don't care

[Anonymous Coward]

It isn't the subscriber base. It's the control of content creation.

Re:Don't care

[SuricouRaven]

There's the UK approach: We have the 'company that runs the wires' and the 'company that moves the data.' The BT infrastructure division is obliged to allow any ISP to rent their telephone lines on equal terms*. The company running the last mile service doesn't care about content - they just connect the end users and the ISPs together.

I can't see it taking off in the US though. The political situation isn't favorable to that sort of regulation, and the lobbying influence too strong.

*Though there have been many problems with unofficial sweetheart deals for BT internet, as they are another division of the same company.

So lets sell off the unprofitable areas.

[jellomizer]

Why do I get the feeling that the Rural locations are going to be part of this group. You know the group that may have miles of cable to maintain, for a less populated group of people. And giving up that group, to the competition prevents them from keeping their costs down, as they are covering more expensive areas to maintain. Thus making them seem less appealing. Causing people in that region to try to get a more affordable service in that area. Thus making Comcast look like the savior coming in to save the day!

Re:So lets sell off the unprofitable areas.

[jellomizer]

The smaller companies, tend to pick up the less profitable areas, because the big guys get them all. Think of it as an Easter egg hunt. The more aggressive stronger boys will often get all the easy to find eggs, leaving the little smaller kids, trying to find the harder to find eggs...

However they usually end up with something so they are happy. The same thing with cable companies. If they can expand their range all the better. If they get lucky a particular area could start growing thus give them something more valuable. However more people who know their name the better.

Worth of a cable subscriber

[WPIDalamar]

Does this mean a cable subscriber is worth ~ $5000 to a cable company?

Re:Never going to work

[The Grim Reefer]

Until Comcast gets split into NBC and ISP again, no one will ever support them in expanding their business.

Sure they will...

For the right price.

So can we call it an oligopoly now?

[water-and-sewer]

It's ridiculous one company can just 'sell' its customers. Customers should have the choice. This is ridiculous and unfair and shows any semblance of 'regulation' of the field is a joke. Regulation in name only.

How about if I just sell a couple of 'bought' Congressmen? Because they weren't doing much anyway, other than pissing me off.

I'm all about free markets but...

[bobbied]

Really? So we are going to let a company (Comcast) placate the regulators by doing two things? First, by selling some of their customer base to a competitor and then spinning off another competitor. This should NOT happen.

Fist, anytime you have to sell off part of business in a merger to keep the regulators happy it should be a HUGE red flag. It means that you fully realize that your proposed merger is going to create a company that is too large. I hear shades of Microsoft trying to *GIVE* M$ Money to a competitor in order to buy Intuit in a deal that got rejected by regulators (if I recall correctly). Even if the competition is OK with the deal, any horse trading like this should pretty much be considered an admission that the resulting company is too big.

Second, can anybody imagine why you'd want to create some new company when doing a deal like this? Why do they want two separate companies? Usually it is expensive to split a company and unless the two businesses are TOTALLY different kinds of business it usually is more expensive to run two companies over one. So what are they going to gain? One reason they spin off similar companies is to restructure debt and position future liabilities. You take the bad parts of a company (that nobody wants to buy) and spin them off to rid yourself of debt and liabilities, which you dump into the spinoff. So if you see a segment of your business is dying, or the future liabilities are looming (like expensive Union pension plans and older employees) you unload them. Then the child company dies a slow and painful death trying to deal with the debt while the parent lives on.

Both of these actions tell me that Comcast knows that the merger will not be approved so they are grasping at straws in a vain attempt to placate regulators. This merger may still happen, but if it goes though it will be a bad deal for consumers and I'll bet that we find out that Comcast dropped some serious money behind the scenes in the form of bribes, campaign contributions, and lobbying to make it happen. Crony politics are in play and I guess Comcast didn't donate enough to campaign coffers in the last round, or they really need money badly this time around.