Comcast Case Study

        3rd Written Assignment

                    NAME：caiyi zhou   NUID：001617137

There are three main reasons explaining Comcast’s will to merge with AT&T Broadband. Firstly, with the Telecommunication Act of 1996 come out, traditional cable operators including Comcast was thrown into battle with each other to capture more customers. Faced with fierce competition, Comcast surprisingly maintained its focus on acquisitions and obtained short-term success. At the same time, AT&T Broadband was so attractive that many competitors showed interest in it(exhibit1).

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With the fear that its survival in the industry would be threatened, Comcast was eager to purchase AT&T. Next, Comcast were hit with soaring programming costs from content providers like Walt Disney and Viacom. With margins were being squeezed, there was a pressing need for Comcast to buy AT&T’s cable business beacuse their reach and scale would enable Comcast to capture price concessions from programmers and vendors. Last but not least, the merger will create value for its customers, shareowners and employees by bringing more services to more people more quickly. Moreover, this could be a leap forward in realizing a vision that thousands of AT&T people have worked toward - bringing greater choice in affordable broadband video, voice and data services to even more American homes.

It seems to make a ‘no lose’ situation for Comcast to buy AT&T broadband. Things are never quite as simple as that. I can even list several reasons for not purchasing AT&T broadband. Firstly, as had been talked in the case summary, before completing the merger, management team has to convince the shareholders to agree with them, It’s far complicated than you can imagine. The prices offered by Comcast may be unable to satisfy the shareholders of AT&T, who can and how to eliminate the disagreement between them? As reported, the biggest shareholder of AT&T called

Malone actually disapproved this decision. Both sides have to think of way to solve this problem. Secondly, Comcast has to staffing the senior management team to lead this new company. This is not a relaxing job because the personnel is vital to the development of a company. Last but not least, the senior management has to articulating the vision and goals of the new company. I believed much deliberation and foresight was needed to run the merged company. If Comcast failed in any of the above points, the merger would possibly be a failure.

The reason why Comcast should purchase AT&T broadband has been talked in paragraph1. It’s just what the senior management planned as well. Merger could enhance its position in the telecommunication market among its competitors. Besides, soaring programming costs from program providers would be reduced because larger market share would lend power to Comcast to have a opportunity to discuss with the providers about the pricing.

If the merger was completed, the first measurement to evaluate is the goal Comcast proposed at the beginning. Whether the estimated $2 billion of annual operating synergies was extracted successfully from the renegotiation of contracts, reduced overhead, and reduction in costs associated with telephony and hardware procurement. Besides, whether the goal of improving AT&T’s 20 percent EBITDA margins to an industry average of 40-42 percent has been achieved. Last but not least, if the merger failed to secure Comcast’s position among its competitors, the merger would still be judged as a failure.