This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Is the Comcast-Time Warner Cable Deal Really a Good Idea?


NEW YORK (TheStreet) -- "The combination of Time Warner (TWX) Cable and Comcast (CMCSA) (CMCSK) creates an exciting opportunity for our company, for our customers and for our shareholders," said Comcast CEO Brian Roberts.

But is it really?

The Time Warner-Comcast deal is expected to create a massive subscriber base of 30 million for Comcast, plus proceeds of $7.3 billion. That cash will come from Comcast's sale of cable systems with 1.4 million subscribers to Charter Communications (CHTR) in order to gain regulatory approval for the Time Warner acquisition.

The merger places Comcast in the lead of the cable communication world. Let's look at whether the deal is worth it from a business and finance standpoint.

So what are the potential pitfalls?

1. Not focusing on the voice and video business

Cable TV is fast becoming a thing of the past. All the major TV providers lost a collective 113,000 subscribers in Q3 of fiscal 2013, with Time Warner Cable losing a whopping 306,000 TV subscribers. Tom Rutledge, CEO of Charter Communications, was "surprised" that 1.3 million of his 5.5 million customers opted out of the TV option.

In fact, the video and voice businesses have shown the slowest growth for Comcast, while Time Warner Cable's video and voice business shrank in 2013. It can be safely concluded that, with the massive $45.2 billion deal, Comcast was not looking to improve its cable TV business.

So, then, what is it looking for, and what does it stand to gain by the deal?

2. Net broadband subscriber growth is slowing

Time Warner Cable is a leader in deploying community Wi-Fi, with more than 30,000 hotspots, primarily in Los Angeles and New York City. The only effective step toward online video streaming is a far stronger presence as an Internet service provider. With the merger, Comcast mainly aims to magnify its market position in the Internet world. In fact, as reported last week, the company intends to put up 8 million Wi-Fi hotspots in the U.S. by the end of 2014.

But strangely, the net additions of broadband subscribers aren't doing much. Comcast added 1.16 million broadband subscribers in 2011 and 1.30 million in 2013.

Are U.S. Internet subscribers gradually moving on to better options? What's going on?

In truth, there are several other high-speed options available for U.S. Internet consumers these days. According to, Verizon (VZ) Fios and Midcontinent are the top two Internet service providers when it comes to speed.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • 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 Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs