Comcast stock treads water during tough FCC merger review

Posted: July 14, 2014

Comcast Corp. announced its $45.2 billion deal to acquire the nation's No. 2 cable operator, Time Warner Cable Inc., in mid-February.

The apparent loser was midtier cablecaster Charter Communications Inc., which had been making hostile overtures for Time Warner Cable.

Now fast-forward five months. Today, shareholders in Comcast and Charter could have different thoughts about winner or loser in the takeover, at least to this point.

The stock in Charter has gained 18 percent as Wall Street seemed relieved that the debt-heavy company wouldn't have to borrow additional billions of dollars to acquire Time Warner Cable.

Charter stock closed Friday at $162.27, up from $137.57 on Feb. 12, the day before Comcast's plans were announced.

Comcast stock, meanwhile, has treaded water as the Philadelphia cable company finds itself in a tough regulatory review of the merger.

Just last week, the Federal Communications Commission appointed a team to evaluate the merger and began its 180-day "shot clock" to review it.

The merger-review team includes William Rogerson, a Northwestern University economics professor who voiced opposition to Comcast's acquisition of NBCUniversal. Rogerson previously served as FCC chief economist.

Hillary Burchuk, a trial attorney with the FCC's general counsel office, also will evaluate the merger for public benefits or harms. She is a former attorney in the Justice Department's antitrust division.

The department separately has been asking questions for more than a month. Patrick Gottsch, founder and board chair of Rural Media Group Inc., said he and other company executives spoke with Justice Department antitrust officials in May for four hours.

The meeting followed a congressional hearing. Gottsch testified that Comcast had dropped the Rural Media RFD-TV network in Colorado and New Mexico in 2013. RFD-TV airs agricultural news, country and bluegrass, and rural lifestyle segments.

Gottsch said Comcast's decision wasn't justified. Comcast said it needed the RFD-TV bandwidth for more popular channels.

Justice antitrust officials also have asked information of CBS Corp. and the Walt Disney Co., according to published reports.

Experts believe that Comcast - the most valuable company in the Philadelphia region, based on its stock-market capitalization - may have to agree to concessions to get approvals.

Comcast already has offered concessions and says the merger won't eliminate any pay-TV competitor.

"The regulatory review and the uncertainty has held back the stock," Dave Heger, communications services analyst with Edward Jones in St. Louis, said of Comcast.

"There is a dark cloud hanging over it with the deal, while with Charter there is some relief."

Comcast stock closed Friday at $54.55, down from $55.24 on the day before its February Time Warner announcement.



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