Time Warner Cable And Comcast Corporation Merger Case Study
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The Time Warner Cable and Comcast Corporation Merger is a recent case that is currently pending approval by the FCC. This proposed merger started in November of 2013 when Comcast was looking to make a bid for Time Warner. At the same time, Charter Communications was looking to make a similar bid. Comcast ended up winning the bidding war with an offer of $45.2 billion. Charter continued to fight the proposition until reaching a deal with Comcast in April of 2013 that would result in Charter receiving a slice of Time Warner subscribers after the merger.
After the Boards of Directors for the respective companies agreed on the merge, they decided that the merger would take place as a friendly stock transaction. This would result in Comcast acquiring…show more content… For broadband internet speeds, Comcast offers 505 mbps in a majority of their consumer services areas and 105 mbps on average, whereas Time Warner only offers 50 mbps in a majority of its service locations, doubling those speeds to 100 mbps in certain areas most likely with a higher premium. The newly merged company will be responsible for investing in and upgrading the quality and reliability of Internet service to these newly acquisitioned customers. For cable television, Comcast will also be offering their video on demand, streaming, and DVR services to the new service…show more content… The merger would raise HHI in the cable market by 500 points and in the broadband market, the HHI would raise by 675 points. This makes both internet and cable markets highly saturated.
Due to this merger, Time Warner-Comcast would have its services extended to 19 of the 20 largest cities in the nation. While there are other service providers such as Verizon, DirecTV and Dish, in smaller rural areas, it will be hard pressed to find firms that will compete with the Time Warner-Comcast giant.
Comcast has increased their offered internet speeds 12 times over the past 12 years. They also are the largest firm deploying DOCSIS 3.0 modems. While these are impressive figures, the tiers of Comcast are not competitive to fiber competitors, such as Google Fiber. Speeds top out at 105 Mbps, at a rate of $89.99 per month and at the absolute bottom is 3 Mbps at $19.99 per month. Time Warner offers a topped out tier at 50 Mbps. The added network infrastructure from Time Warner will not provide Comcast the space to increase their premium tier offering to a speed and rate that is strongly competitive with other competitors. However, since fiber to home networks are still in their infancy, there is no true motivation to push Comcast to boost their speeds and bring down their