Wade4Wireless

What if Comcast and Amazon merged?


Let me start by saying I made all of this up by wondering about a hypothetical merger. This isn’t real, just some fun musings from Wade’s (that’s me) head. I think it’s fun to consider what could happen in situations like this.

To be clear; this is purely hypothetical. 

I am thinking it would make sense. In fact, this would make sense to me. I think this is fun to think about. What a match made in heaven, don’t you think?

Think about it, the video would become a powerhouse putting Prime together with Peacock and NBCUniversal could be great. Prime Studios with DreamWorks. Pretty cool, right?

Comcast’s great distribution system ties to Amazon’s sales platform could make for a marriage for internet and sales distribution. Amazon is already in every household with an internet connection. Maybe Amazon would help Comcast distribute to more communities and become a savior to underserved areas. Wishful thinking, I know, but I like the pitch.  

Think about Comcast’s data centers along with AWS, seriously, it would become a powerhouse in distribution. 

Assumption:

I am assuming that if you’re reading this then you know who Comcast is. If you don’t then don’t bother reading any further. Go back to that underground bunker you’re living in.

If you don’t know who Amazon is, maybe you’d better go back to that cave you live in and talk about how electricity is the new evil inheriting the Earth. 

Who else would merge with Comcast?

I was thinking that Verizon could, but let’s face it, why would Comcast want to merge with Verizon? Or AT&T? Neither one looks attractive to other businesses right now. They don’t have the best leadership and the stock prices are not improving.

Regardless of what you think of Comcast, they have a very strong brand and continue to slowly grow revenue. The profitability of Comcast is pretty amazing. I don’t see anyone taking them over when their 2023 gross profit was $42.3B. Impressive right? 

Comcast is way more than a cable company, (Xfinity). This Philadelphia company owns NBC and many other assets. It became a conglomerate. 

At first, it made sense that a CSP would merge with them, but then I thought about it and realized that no CSP looks attractive, specifically AT&T and Verizon. My perception is that all the Teclos are becoming a commodity now that they’re recognized as utilities. The only thing they have to compete is price. Coverage may be getting better but it’s so close now it doesn’t matter. They can only promote the new G for so long. People care less and less. 

Quick history lesson,

Let’s face it, it’s been rough for Verizon and AT&T. They are still “executive heavy” and rely too much on their names to carry them. Besides, AT&T and Verizon have their own fiber to the home businesses that Comcast may see as competition.

Also, remember what happened last time AT&T or Verizon got into entertainment?

In 2000, Time Warner bought AOL for $182B in stock. AOL was on the decline at the time, but still a player. In 2009 they spun off AOL. Then in 2018 AT&T bought Time Warner. AT&T then spun off WarnerMedia 4 years (2022) later. The two masterminds were Randall Stephenson and John Stankey. Randal went over to run Warner Media which is now called Warner Bros. Discovery, WBD. Apparently, once they got out from under AT&T they were able to increase revenue and turn a profit without the old rigid corporate structure choking them. 

Verizon bought AOL for $4.4B in 2015 after AOL bought Huffington Post from Verizon. Was it too much, of course, stupid. Then, in 2018 Verion bought Yahoo for roughly $4.8B. Remember Verizon Media? This was done under then Verizon CEO Lowell McAdam. Then, in 2021 Verizon spun off Verizon Media to Apollo Global for $5B, roughly $4.25B in cash and the rest in a stake in the new company. Both Yahoo and AOL were rolled up in that so basically Verizon turned $9.2B to $4.25B.

These companies are great at losing money, especially with media companies. 

On the other hand, 

Comcast is making a lot of money on the MVNO division using Verizon as the carrier. I thought that agreement might lead to something more, but the only thing that showed me is how successful Comcast was at stealing market share from Verizon. 

After the MVNO success, Comcast didn’t pursue the wireless network they planned to build, which makes perfect sense. Why invest if they don’t need it? Just sell some of your spectrum, for a profit, and stick to Wi-Fi and some CBRS. Keep it simple and profitable. (Sept 12, 2023 – T-Mobile US said on Tuesday that it has agreed to acquire spectrum in the 600 MHz band from Comcast for between $1.2 billion and $3.3 billion in cash.)

Hence, the MVNO agreement was cost-effective and easy. They use your own Wi-Fi and perhaps come CBRS to offload to save on Verizon data costs. Very smart!

I thought about other cable companies, but that didn’t make sense either since the FCC would probably be very critical, even though it would only be an expansion of territory, not any type of gain in local market share. If you know how cable companies work, then you realize very few of them compete directly. They all actually work together, looking up to Comcast as the big brother who has the budget to test and try new things. Once Comcast adopts something, several of the others will follow. They all have their own territories. I look at them like one big family.

I do see Comcast taking over more businesses that make sense. They have so many contractors and partners that they work with that would make perfect sense. 

The thing that impressed me was how well Comcast has done with media companies. They have actually grown NBC, launched Peacock, and appear to be flourishing on the streaming market. Good for them. 

I also believe Comcast would like to snap up small, profitable, and growing businesses in their coverage areas. 

What would be the benefits of Comcast and Amazon merging?

When looking at the combination of Comcast and Amazon, what would you think of? One is consumer first and the other isn’t. Would this alone be a show stopper?

The partnership of Comcast’s robust infrastructure and Amazon’s e-commerce and cloud platform could create a seamless integration of services. Imagine your internet provider not only delivers lightning-fast connectivity but also offers prime access to marketplaces of anything you want! This could revolutionize the way we shop, stream, and interact with technology.

Comcast’s experience in cable and broadcasting, combined with Amazon’s streaming services like Prime Video, could lead to the production of diverse, high-quality content available across multiple platforms. This synergy could provide consumers with an unprecedented array of entertainment options, all accessible through a single, integrated service.

Maybe Xfinity wouldn’t need those cable boxes anymore and simply provide FireTVs and a high speed connection to every home. Maybe Xfinity’s delivery could be improved by merging with Prime to increase viewer satisfaction. I don’t know how many of you use the Xfinity app on FireTV, but I think they could do better.

Also, let’s talk about customer service. Who has better customer service? Hands down I would say Amazon. When you call they really want to help. When I call Comcast they want to sell me something you never wanted and no matter how many times I say no, they sign me up anyway and instead of lowering your bill, it always goes up. Hence, I hate their customer service. 

The combination of services into a combined force would create savings and synergies beyond customer service and video.

The data centers and AWS could see great savings when you bring the two together in co-located markets. This is something both teams could do well. I believe a data center with Edge and Cloud services could improve delivery as well as cut costs. The efficiencies would be amazing. If they could merge them using COTS models, then it would make sense. Of course, I don’t know what the similarities or dissimilarities are, so I am making a leap of faith here. 

Think of the data analytics that the two of them could combine and build. We all know that Amazon is one of the best in the world at collecting data and putting it to good use. They use it in every aspect of their business to make improvements and streamline service. While Comcast also does this, it would really add data power to each side. 

Let’s look at the global reach of Amazon combined with Comcast’s infrastructure. I would think that underserved areas could be offered broadband services, bridging the digital divide and fostering greater connectivity and economic growth. Hypothetically of course.

I see expanded global connectivity with broader implications on market dynamics. I consider the pursuit of innovation and growth must be balanced with the preservation of a competitive and fair marketplace. 

Oh, I envision happy shareholders. 

What about the data?

Think about the data centers of Comcast and AWS. Comcast knows networking and data centers, so does AWS. I believe this side of the business would boom as well. 

I also think this is where regulators would see the most issues. Here’s why.

Comcast, at least in its markets, has quite the distribution center for residential and business. While AWS supports the next layer back with cloud services offering real efficiencies if you could merge the two together. While Comcast’s footprint is limited, I believe it would still be a cost savings in some of the most expensive markets, like in the Northeast. 

Can you imagine these two data powerhouses combining their data center and distribution know-how on a new level. One that we’ve only dreamt about in the past. I see a new landscape being formed. One where the efficiencies of the Cloud and Edge make up for the merger costs going forward. 

A data center powerhouse could emerge.

What would be the risks?

A risk I see is having Comcast leave Philly! For me, and the state of Pennsylvania, that would suck. So I would ask that Comcast remains headquartered there. 

One of the primary risks is the potential for creating a monopolistic entity. Such a merger could significantly reduce competition, leading to higher prices for consumers and stifling innovation. The concentration of market power in the hands of a single corporation could lead to an imbalance in the marketplace, where the merged entity could dictate terms and potentially engage in anti-competitive practices.

The regulatory landscape presents another significant hurdle. Mergers of this magnitude are subject to intense scrutiny from regulatory bodies such as the Federal Trade Commission (FTC), which examines the implications for competition and consumer welfare. The process is rigorous and can result in the imposition of conditions or even the blocking of the merger altogether.

Employee welfare is also a concern. Mergers often lead to restructuring and consolidation, which can result in job losses. The cultural integration of two large companies can be tumultuous, affecting employee morale and productivity. The leadership chosen to steer the merger plays a critical role in mitigating these risks, ensuring that the transition is smooth and that the workforce is aligned with the new corporate vision.

Privacy and data security are increasingly important considerations. Both Comcast and Amazon collect vast amounts of consumer data, and their merger would combine these data sets, raising concerns about privacy and the potential for data breaches. The management of this data would require robust safeguards to protect consumer information and maintain trust.

The impact on suppliers and partners must be considered. A merger could alter the dynamics of existing partnerships and supply chains, potentially removing smaller players and affecting the broader ecosystem.

In the cultural realm, the consolidation of media assets could lead to a homogenization of content, reducing the diversity of voices and perspectives in the media landscape. This could have far-reaching implications for democracy and the free exchange of ideas.

What about the sheer scale of the integration poses operational risks? It would be huge. The complexity of merging the technological infrastructures and operational systems of two large companies is a daunting task, fraught with the potential for disruption to services and customer experiences.

Would the SEC allow Comcast and Amazon to merge?

Who knows.Such a colossal union would call for an extensive review by the SEC, whose mandate is to protect investors and maintain fair, orderly, and efficient markets.

The SEC’s role in evaluating any merger, especially one of this magnitude, involves a thorough analysis of the proposed transaction’s impact on competition, consumer choice, and the overall market landscape. The historical precedent set by Comcast’s previous merger attempts, such as the acquisition of Time Warner Cable, provides a framework for understanding the potential complexities involved.

A merger between Comcast, a leading provider of cable television and internet services, and Amazon, a behemoth in online retail and cloud computing, would create a multifaceted entity with significant control over both content and distribution. This raises questions about market concentration and the potential for anticompetitive practices, which the SEC would scrutinize closely.

The SEC would assess the merger’s alignment with public interest commitments and the promises made to consumers. The regulatory body would examine whether the combined entity could potentially stifle innovation or hinder competitors’ ability to enter or compete in the market.

It’s important to note that the SEC’s evaluation process is rigorous and multifaceted, involving not only an assessment of the financial aspects of the deal but also the broader implications for industry standards and practices. The SEC’s EDGAR database, a repository of company filings, would serve as a vital resource for analyzing the details of the merger and its compliance with regulatory requirements.

While the hypothetical merger between Comcast and Amazon presents an intriguing scenario, the SEC’s approval is not a foregone conclusion. Regulatory compliance, market analysis, and public interest would play a pivotal role in determining the feasibility of such a monumental corporate union. As with any major merger, the devil is in the details, and the SEC’s scrutiny would ensure that all aspects of the deal are examined under the microscope of federal regulations and statutes.

Would the FCC protest a Comcast and Amazon merger?

The Federal Communications Commission, (FCC), is the agency responsible for overseeing and approving such monumental transactions. they would be at the heart of a complex debate balancing competition, innovation, and public interest.

The FCC’s mandate is to evaluate the implications of telecommunications mergers to ensure they serve the public good. Historically, the FCC has scrutinized large-scale mergers, assessing them on a case-by-case basis. The Commission’s approach is to review legal, economic, and public interest issues, often eliciting a significant amount of public comment.

This hypothetical merger sets up a unique set of challenges and considerations. The FCC would likely examine the potential impact on competition within the industry, the possibility of creating a dominant market player, and the effects on consumer choice and pricing.

The FCC’s past dealings with Comcast, such as the approval of the Comcast-NBCUniversal transaction, may provide some insight into the process. Each merger presents a new set of circumstances that require careful analysis.

The FCC review process would focus on the following areas:

  • Market Concentration –  The FCC would assess whether the combined entity would hold an excessive share of the market, potentially stifling competition and harming consumers.
  • Service Quality and Accessibility – Consideration would be given to how the merger could affect the quality and availability of services offered to the public.
  • Innovation and Investment – The FCC would evaluate the merger’s potential to spur or hinder technological advancement and investment in infrastructure.
  • Consumer Protection – The protection of consumer interests would be paramount, with the FCC examining how the merger could impact pricing, privacy, and data security.
  • Public Opinion – Public comments would play a crucial role in the FCC’s decision-making process, reflecting the concerns and support of individuals, advocacy groups, and industry stakeholders.

Who else would look into this?

The Federal Trade Commission (FTC) for one, looking to protect consumers and maintain competition. In the event of a merger, the FTC would closely examine the potential for anticompetitive behavior, monopolistic practices, and any other actions that could harm the consumer experience or stifle market competition.

The Department of Justice’s (DOJ) Antitrust Division. This body is tasked with enforcing antitrust laws and ensuring that mergers do not adversely affect competitive market structures. The DOJ would analyze the merger’s implications on market dynamics, evaluating whether the combined entity could unfairly dominate the market or engage in exclusionary practices.

State attorneys general would also have a voice in the process, representing the interests of consumers at the state level. They can challenge mergers that they believe would negatively impact their constituents, often working in concert with federal agencies to address regional concerns.

International regulatory bodies might come into play, especially given Amazon’s global reach. These could include the European Commission or other national competition authorities, which would assess the merger’s impact on international competition and market access.

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