What Will Comcast Do With The $45B It Couldn’t Spend Buying Time Warner Cable?

Comcast’s dream of achieving full coast-to-coast cable dominance this year came to an official end this morning when they had to admit the Time Warner Cable merger was just not going to happen. But Comcast is a huge business, with impatient shareholders. They need to continue proving growth, which means buying other businesses to make theirs bigger. TWC might not be on the table anymore, but something, somewhere has to be.

So with $45 billion just burning a hole in their pocket, what can Comcast spend it on? Here are some strategies they might try.

Go Wireless
Comcast was wrong when they claimed mobile data was real competition for cable — but they were on the right track. The wireless sector is growing, the tech is improving, and mobile looks in basically every way to be the wave of the future. There are reasons that AT&T and DirecTV want to merge: bringing wireless service in-house with pay-TV and broadband service looks like a really good bet for the next decade or two of the 21st century.

AT&T and Verizon are complete non-starters for a merger (aside from the huge competition issues, both companies are worth billions more than Comcast is), but Sprint or T-Mobile could be on the table. Sprint’s parent company isn’t necessarily looking to sell right now, but T-Mobile’s has been trying to find a buyer for months. And at a cool $28 billion market cap, T-Mo would be a steal for Comcast.

Since wireless is the one pie Comcast doesn’t currently seem to have a thumb in, that could go better for them than the TWC proposal did. Though they’d still be in the awkward position of arguing that all that wireless competition they claimed existed when they wanted to buy TWC suddenly doesn’t actually compete with cable internet after all.

Streaming Video
Comcast already owns anything in the NBC Universal family, and with that came a 33% stake in Hulu. But even though Hulu keeps chugging along, it’s not the big name in the streaming business. The elephant in that room is clearly Netflix.

Right now, Netflix is valued at just shy of $34 billion. Comcast has the money… if they could make the case.

Analysts have suggested that Comcast might actually try for it. That would make them hugely competitive in the streaming space, as traditional pay-TV subscriptions decline — but it would have to come with an utterly enormous pile of stipulations to make it through the FCC.

Comcast repeatedly pointed to Netflix (along with Amazon and Facebook) as competition in their regulatory filings for the failed TWC transaction. And it is, in many senses. They’d have to lay out one heck of a compelling case to explain why they were wrong in that transaction in order for a Netflix buyout to pass muster as not being anticompetitive.

Digital Media
Comcast already owns a major broadcast TV network, several cable networks, and a movie studio, thanks to their 2011 acquisition of NBCUniversal. But if the future of news is online and not on the air, why would they stop there?

Indeed, sources say that Comcast has been eyeing one of the foremost of the current wave of new media start-up brands: Vox Media, home to SB Nation, Polygon, The Verge and, well, Vox (among others).

Comcast’s venture capital company is already one of Vox’s investors. And according to Fortune, the two companies were in talks earlier this year that fizzled out. The $300 – $400 million Vox is valued at is basically pocket change in Kabletown. Now that Comcast doesn’t have a mega-merger on its plate this spring, that could free up time and money for them to try again.

Bandwidth Barons
During the net neutrality debates, we heard a lot about Comcast being a “last mile” provider, moving traffic from trunk carriers, as it were, over the shorter distances to your house. That’s where all the peering and interconnection disputes came into it.

Comcast could short-circuit some of their peering agreements (at either end) pretty much forever if they owned the next chain in the link, too.

Level 3 has a market cap of $19 billion, give or take. Cogent’s about $1.6 billion. Comcast could afford either — if it would be allowed to buy them. The Antitrust Division might have a thing or two to say about Comcast buying out the backbone, which everyone uses, and not just the last mile. That said, other major Tier 1 ISPs already do include AT&T, Verizon, and Sprint so it might not be so farfetched after all.

International Roaming
Pay-TV penetration in the U.S. probably peaked in the last couple of years, and is going to be on a gentle downhill slide. But there are 195 other nations in the world and Comcast could acquire TV and possibly broadband operators overseas.

Highly-regulated European nations are unlikely to welcome a broadband intrusion from America’s perennial Worst Company, but there are plenty of other places in the world where infrastructure can be built out for pennies on the dollar as compared to within the U.S. If Comcast bought a local provider elsewhere, and targeted the right place, they could theoretically have an in to as captive a broadband-craving audience as they do here.

Smaller Cable Companies
Comcast got to be Comcast because of consolidation. Cable companies used to be hyper-local, serving just a few municipalities or counties. Then small companies started merging, and kept merging, until they became very large companies — which still snapped up tiny ones.

Regulators rightly decided that merging the #1 and #2 cable operators was a bridge too far, but they might be less hostile to Comcast buying small, regional or local providers. Adding 12,000 subscribers here and there doesn’t have quite the same level of national impact that adding 12 million would have.

Targets in the top ten might not pass muster with the FCC, but Comcast could target companies in the next rung down, like WOW or Cable One. The companies are privately-owned so it’s hard to know exactly what they’re valued at, but either (or even both together) would be a fraction of the cost of acquiring TWC.

And if that doesn’t work…
$45 billion is just about enough money to buy 7 billion burritos. If all else fails, Comcast could buy everyone on Earth a nice, hearty lunch. That, at least, might win them some goodwill.

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