With mega-deal derailed, what's next for Comcast?
Comcast (CMCSA) Chief Executive Brian Roberts, who built up the family business through acquisitions, will likely take a breather from huge deals in the wake of its the cable giant's derailed bid for Time Warner Cable (TWC).
"There is a zero percent chance that Comcast goes in front of the regulators (especially in this Democratic environment) with any deal of size," Wells Fargo analyst Marci Ryvicker wrote in a note to clients.
Instead, Comcast will like spend a large chunk of cash -- $10 billion, for instance -- on buying back its stock, Ryvicker added.
The $45 billion deal for Time Warner collapsed amid concerns by regulators that the combined company would have controlled 57 percent of the U.S. broadband market and 30 percent of the pay-TV market.
Some analysts speculate Comcast might try to acquire a wireless provider such as Sprint (S) or T-Mobile (TMUS), although regulatory concerns about competition in the broadband market would be a factor arguing against such purchases.
"They knew there was going to be a big regulatory risk going in," Jonathan Chaplin, an analyst with New Street Research, told CBS MoneyWatch. "The biggest opportunity sitting in from of them is wireless. They are going to start a wireless company."
After all, as IBISWorld noted on Friday, consumers are increasingly giving up their wired phones and moving to exclusively to wireless providers. That has increased "the percentage of wireless-only households to 41 percent, as of December 2013 according to the National Health Interview Survey released by the National Centerfor Health Statistics," IBIS wrote.
Gaining a foothold in wireless would give Comcast an entry into a larger percentage of household spending, said New Street Research's Chaplin, who believes the company should build, rather than buy, its wireless operations. Comcast has had the option to launch a wireless service through existing agreements with Sprint and Verizon (VZ) for years but has opted not to do so.
"A T-Mobile deal would play to arguments that wireless broadband is the last best hope for competition to wired,"Craig Moffett, an analyst at MoffettNathanson wrote in a note. "Nor, for that matter, is it likely that they would have the temerity to ask for approval of a content deal."
The future for other smaller cable rivals such as Cablevision Systems (CVC) remains unclear. Charter Communications (CHTR), controlled by billionaire John Malone, tried to buy Time Warner Cable before being outbid by Comcast.
Time Warner Cable "showed no appetite for being acquired by Charter at the time, and our suspicion is that that hasn't changed," Moffett wrote.
Nonetheless, Malone may try again. Bloomberg News reported that Charter advisers have already "reached out" to Time Warner Cable to begin friendly talks on an acquisition.
Charter's $10.4 billion acquisition of Bright House Networks was contingent on the Comcast-Time Warner deal, so it also fell apart, at least for now. However, Bloomberg says that deal may alleviate concerns about Charter's debt level because it would boost Charter's borrowing capacity.
At Time Warner Cable, CEO Robert Marcus, who would have netted $80 million had the deal been completed, struck an optimistic tone in a press release expressing confidence that the company's operations and capital allocation would continue to create "significant value for shareholders."
A Time Warner Cable spokesman declined to elaborate further, and Comcast and Charter did not immediately respond to requests for comment.
The Comcast defeat surprised some of its most vociferous critics because, as Bloomberg News noted, no company spends more money lobbying Congress.
However, Comcast clearly factored in the potential for the deal's demise because the deal stipulated that Comcast won't have to pay Time Warner Cable the typically hefty breakup fee incurred when a party walks away from a merger.