Merger Madness

The last year was a busy one for mergers in the industry. We saw Charter gobble up Time Warner Cable and Bright House Networks. We saw CenturyLink buy Level 3 Communications. But those mergers were nothing like we see on the horizon right now. I can barely read industry news these days without reading about some rumored gigantic acquisitions.

There have always been mergers in the industry, but I can’t remember a time when there was this level of merger talk happening. This might be due in part to an administration that says it won’t oppose megamergers. It’s also being driven by Wall Street that makes a lot of money when they find the financing for a big merger. Here are just a few of the mergers being talked discussed seriously in the financial press:

Crown Castle and Lightower. This merger is already underway with Crown Castle paying $7.1 billion for Lightower. It matches up two huge fiber networks along with tower assets to make the new company the major player in the small cell deployment space, particularly in the northeast.

Discovery and Scripps. Discovery Communications announced a deal to buy Scripps Networks for about $11.9 billion. This reduces the already-small number of major programmers and Discovery will be picking up networks like the Food Network, HGTV, Travel Channel, the Cooking Channel and Great American Country.

Comcast, Altice and Charter. Citigroup issued a report that speculates that Comcast and Altice would together buy Charter and split the assets. Comcast would gain the former Time Warner cable systems with the rest going to Altice. There is also talk of Altice trying to finance the purchase of Charter on its own. But with Charter valued at about $120 billion while also carrying around $63 billion in debt that seems like a huge number to finance. This would be an amazing merger with the ink not yet dry on Charter’s merger with Time Warner.

Amazon and Dish Network. This makes sense because Amazon could finally help Dish capitalize on its 700 E-block and AWS-4 spectrum licenses. This network could be leveraged by Amazon to track trucks and packages, monitor the IoT and to control drones.

T-Mobile and Sprint. Deutsche Telecom currently owns 63% of T-Mobile and Softbank owns 82% of Sprint. A straight cashless merger would create an instantly larger company and gain major operational advantages. The FCC and the Justice Department nixed a merger between T-Mobile and AT&T a few years back, but in an environment where the cellular companies are getting into the wireless business this might sail through a lot easier today. Sprint has also been having negotiations for either a merger or some sort of partnership with Comcast and Charter.

Comcast and Verizon. There is also Wall Street speculation about Comcast buying Verizon. The big advantage would be to merge the Comcast networks with the Verizon Wireless assets. Comcast has a history of buying companies in distress and Verizon’s stock price has dipped 17% already this year. But this would still be a gigantic merger worth as much as $215 billion. There are also some major regulatory hurdles to overcome with the big overlap in the northeast between Comcast and the Verizon FiOS networks.

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