The two largest cable companies in the U.S. are set to join forces in a huge deal that could change the broadband landscape if approved. Comcast (s CMSA) is expected to announce a deal to purchase Time Warner Cable (s TWC) Thursday for $159 a share, which would value the company at around $44 billion, according to CNBC and Bloomberg. Update, Thursday 2/13/14: This is official, with the deal coming in at $45.2 billion.
The reported deal will present an opportunity for new FCC Chairman Tom Wheeler — a former cable industry lobbyist — to signal how he plans to regulate the U.S. telecommunications market. A combined Comcast/TWC would have 31.6 million broadband subscribers, based on each company’s year end results, although CNBC reported that Comcast would be willing to divest itself of subscribers in some markets to lessen the impact. Bloomberg described the deal as giving Comcast control of “almost three-quarters of the cable industry, according to the National Cable Television Association.”
And it’s not like the U.S. market for broadband is particularly competitive in early 2014. Roughly three-quarters of U.S households have only two options in their local markets for broadband services, and about two-thirds of broadband subscribers are subject to data caps (which TWC does not do except for on an opt-in basis). There’s also the question of certain providers having suspicious problems delivering only certain types of content to their subscribers that happens to compete with their entrenched video businesses.
Source: Leitchman Research Group
So, in many ways this deal is something that broadband fans will watch with trepidation, although perhaps the FCC can use its regulatory clout to force Comcast to offer transparent interconnection policies and guaranteed network neutrality as a condition of approving the deal. After all, as part of the NBC-Universal transaction conditions, Comcast is the only ISP that currently can’t discriminate against web content in the wake of the appeals court decision that the FCC’s network neutrality rules. Even if the FCC doesn’t want to open the door to any new regulations on network neutrality, it could protect net neutrality for millions for a few years time with conditions on this transaction.
The deal is expected to be officially announced tomorrow morning, and we’ll have more details then.
(This post was updated several times Wednesday evening as more information became available.)