By Nicole Sims
The $45.2 billion takeover of Time Warner Cable is seeming more like an uphill, but still winnable battle for Comcast.
When it comes to competition in the industry, Comcast has already agreed to sell three of the 12 million Time Warner subscribers they stand to gain, but by law they aren’t required to.
However, instead of selling these subscribers to another media company to even the playing field, Comcast has recently considered pacing those 3 million subscribers into a spinoff company. A customer base of that magnitude will automatically place this proposed company among the ranks of the top cable companies in the industry, which is already toppled by Comcast.
Despite the fact that this would do little to promote competition among cable providers, the FCC has never established a regulatory gap for the number of subscribers a cable company can have. This fact is a contributing factor of why Comcast has continued to expand and conquer over the past five decades, and has never had a single deal rejected by the FCC.
The lack of government regulation regarding subscribers is not Comcast’s only advantage when it comes to making this deal happen. Time Warner’s top executives have a $135 million incentive to make sure this deal is approved by March 12 of next year. Time Warner calls the payoff the “Golden Parachute Compensation,” in which Comcast has offered Time Warner’s top four executives money to step down if the deal is successful. Time Warner’s CEO Robert Marcus could possibly receive $80 million alone, making his payout the largest “golden parachute” award since 2011.
When it comes to making deals, Comcast is a steady force to be reckoned with. This deal is far from being accepted, but Comcast may have an advantage from the lack of the FCC’s regulation, and support of Time Warner executives. Those are some pretty powerful allies.