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Comcast to acquire Warner Cable – reports

Colossal cable consolidation to rock US broadband and media market

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The US broadband market looks set for a shake-up, with multiple reports tipping Comcast to acquire rival Warner Cable.

CNBC claims it broke the story and The Wall Street Journal has since published a (paywalled) story reporting the same details: it's a $US45bn all-stock deal.

Comcast and Warner are respectively the USA's number one and two cable companies. Both are also internet service providers of note, with Comcast boasting around 20 million customers and Time Warner around 11 million.

Both share the problem that fewer people these days are interested in cable TV bundles, instead preferring over-the-top services like Netflix and Hulu that deliver video-on-demand. A combined entity with 30 million broadband subscribers might find itself in a stronger position to cope with that shift, or even with enough clout to wring some cash out of over-the-top players. Just holding out on upgrades – industry body Cable Lab's latest standard DOCSIS 3.1 promises ten gigabit connections over cable – could also be a powerful move for the combined entity.

Regulatory hurdles therefore almost certainly stand between the two carriers and a deal, as earlier this week Warner was being courted by another US cable outfit, Charter Communications. If, as they are bound to do, Warner's directors felt greater value could be realised by wedding Comcast instead of Charter, shareholders' attitude to the deal probably won't be a problem.

Whether US regulators are as kind remains to be seen. Legislators may also take an interested look at the transaction, given recent rumblings about net neutrality. ®

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