Comcast has now filed both parts of its proposed merger with Time Warner Cable at the FCC and the heavy lifting on vetting the deal, and comments about the deal, can begin in earnest.
Comcast Thursday filed with the FCC the public interest statement, exhibits and license applications for its spin-off of 3.9 million customers, which it promised to do to try and assuage concerns about the size of the combined company. A key public interest point the company makes is how the creation of the new company, SpinCo, will bring more competition to the marketplace—while the TWC merger will not reduce it, Comcast has already pointed out.
"The SpinCo transaction will create substantial public interest benefits," says Comcast. "While SpinCo will be a new company, it will be larger than all but four other cable companies in the United States and will have a tightly integrated, contiguous service footprint. This scale and geographic scope will facilitate investment in innovation and high-quality services within SpinCo’s footprint. From the outset, SpinCo will be well positioned to compete aggressively in the highly competitive markets for high-speed Internet, voice, and video services."
Comcast will not own shares in either Charter or SpinCo after the closing of the spin-off, the company says, and for the first eight years would not be allowed to own more than 1% of SpinCo shares. "In short, SpinCo will be entirely independent of Comcast," the cable operator told the FCC.
As to the public benefit of trading systems with Charter, Comcast says the "geographic contiguity" (clustering) of its system swaps and the "expanded" presence of the combined Comcast/TWC "will produce economies of scale and scope and other efficiencies for Comcast, which will ultimately redound to the benefit of Comcast's residential and business customers."
For its part, Charter says by increasing its scale and better clustering its footpring, it will be "better positioned to compete with regional telco video providers, DBS providers, incumbent local exchange carriers (“ILECs”), and other service providers, while bringing its class-leading services and products to former TWC customers."
The complicated system switch consists of:
"Transfer of cable systems from Charter to Comcast as part of an exchange of systems,
"Transfer of cable systems from Comcast to Charter as part of an asset sale and exchange of systems, and
"Transfer of cable systems from Comcast to a new, independent, publicly traded company ('SpinCo')
"Comcast-TWC Supplement Letter providing an update on the Comcast-TWC merger."
"We have now filed the Public Interest Statement and other documents associated with our planned divestiture of 3.9 million subscribers at the conclusion of the Time Warner Cable transaction," Comcast said in a statement. "Concurrently, Charter has filed their documents for these deals. In addition to the Public Interest Statement for the systems we will obtain directly from Charter, we've filed updated maps and other information which shows, among other things, how the divestitures will change the Comcast footprint after the TWC transaction. With these filings, all necessary applications have been submitted to the FCC and we look forward to continuing to work with the FCC and the DOJ as the review process moves forward."