James Dennin, Kapitall: Comcast, the largest cable company by market cap, is buying its largest competitor.
Usually a mega-merger like this is unsettling for consumers. Without options, without competition, what's to prevent the providers of basic (if not essential) services like cable and broadband from jacking up their prices to unreasonable levels? The question is almost certain to be asked by federal regulators, who place limits on mergers and acquisitions for this very reason.
[Read more from Kapitall: Airline Stocks: Could a Pilot Shortage Squeeze Regional Airlines?]However, there's a good chance the move may benefit consumers. Right now, the balance of power tilts slightly in the favor of content providers like Disney (DIS), who charge cable companies basically whatever they want for certain channels. The most expensive channel is ESPN, which costs almost $5 per consumer, even if the consumer doesn't want it. This is the major reason why your cable bill is so high. Comcast and Time Warner insist that the merger will give them the leverage they need to negotiate better prices for content, which will help keep prices low. But there's a good chance the exact opposite could happen. Politico is reporting that some regulators in Washington are already livid about the deal. They say that to merge the two largest players in an industry where prices have already been going up for years should be " unthinkable." Taken together, you have a recipe for what could be one of the most scrutinized acquisitions of all time – as concerns over anti-trust practices, net neutrality, and the re-shaping of content delivery collide. We built a list of some of the major players in the industry to see how stocks might be affected by the merger. As of 1PM EST, Time Warner's share price was almost 7%.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV