With Comcast’s $45 billion bid to take over Time Warner Cable reportedly dead, the question is quickly shifting from “Will it pass?” to “What happens next?”
The answer is, not much.
Comcast (CMCSA) will remain the country’s biggest broadband and pay-TV provider. Merging with TWC (TWC) would have expanded the company’s geographic control (not to mention negotiating power), but it wasn’t a must-have from the beginning. What’s more, the deal had no break-up fee baked in, so Comcast won’t have to cut a hefty, normally standard check to TWC if and when it officially walks away. (Comcast could not be reached for comment by press time.)
As for TWC, it’s likely that it will get snapped up or merge with another player. Charter Communications, backed by billionaire John Malone, has already expressed interest.
That’s not to say either side will be celebrating. (It would be a particularly sad day for TWC chief executive Rob Marcus, who was supposed to receive $80 million upon completion of the deal.) Wall Street banks and law firms contracted by both companies won’t be smiling either—they stand to lose out on hundreds of millions of dollars that they would have made in fees.
What about consumers, you might be asking? Not much changes for them if the deal is indeed dead. While Comcast had asserted that customers would benefit from the combined entity in the form of improved services and better technology, the company had said admitted that a merger wouldn’t have necessarily brought down costs.
“The impact on customer bills is always hard to quantify,” Comcast executive vice president David Cohen told investors on a call early last year. “We’re certainly not promising that customer bills are going to go down or even increase less rapidly.”
This isn’t Comcast’s first rodeo—not all of its buyout bids have gone through in the past, for multiple reasons. In 2004, it abandoned its hostile takeover attempt of Walt Disney (DIS), which would have made it the largest media company in the world. And while a loss in the TWC buyout bid is an unwelcome blow, there was more at stake getting regulatory approval for the NBCUniversal deal—which the company ultimately won, albeit with some strings attached—back in 2011. That controversial deal, which increased Comcast’s prowess in the content business, also gave it a financial stake in online streaming service Hulu.
Comcast still gets most of its revenue from the cable communications side of the business: In 2014 the communications division brought in $44 billion, primarily from pay-TV, high-speed Internet and phone service. NBCUniversal, meanwhile, brought in an additional $25 billion. But getting a leg up on the content side will potentially help Comcast more than TWC would have in the long run, now that its competitors have shifted to online-only content services like Netflix and Amazon and TV networks, both of which are offering consumers more and more choices outside of the traditional cable bundle.
So what happens next? Not much. But you can expect Comcast to snap up more content-related companies in the coming years. And you can expect it to hold on to its top dog status for the foreseeable future.