×

Sprint Acquisition by Comcast, Charter Deemed Unlikely

Sprint has reportedly entered an exclusive two-month negotiation period with Comcast and Charter that could result in the cable companies either mounting a joint acquisition or taking separate ownership stakes, though analysts deem those scenarios unlikely.

The likeliest scenario is the kind of mobile virtual network operator (MVNO) agreement Comcast and Charter currently have with Verizon, which would allow the cable companies to offer wireless service using Sprint’s network.

But The Wall Street Journal, which broke the story Monday, suggested that John Malone, Charter’s largest investor through Liberty Broadband Corp., is particularly keen on the acquisition scenario, while Comcast CEO Brian Roberts prefers they strike a better MVNO deal than the one they have with Verizon.

Regardless of how this plays out, there are implications for a broad range of companies including T-Mobile, which will see its own merger bid with Sprint sidelined as a result of the exclusive negotiation period, and Dish, which is mulling its own options with its massive stockpile of wireless spectrum.

“We didn’t give a Sprint/cable deal high odds,” wrote Jonathan Chaplin of New Street Research.  “However, the deal corroborates our view that Sprint isn’t as desperate as many thought and T-Mobile didn’t have the leverage that most seemed to assume.”

“An equity stake or outright acquisition is less likely in our view, but not out of the realm of possibility,” said Mike McCormack of Jefferies. “In our view, this likely suggests major hurdles in any Sprint/T-Mobile discussions and could renew speculation of T-Mobile and Dish should Sprint talks falter.”

On Wall Street, Sprint closed Tuesday up just over 2% at $8.18; T-Mobile was down 3.4% to $61.01. Both Comcast and Charter were down just slightly.

However, Chaplin doesn’t see ownership vs. MVNO as simply as an either-or proposition; the MVNO may be just a prelude to eventually taking an ownership position. “A new MVNO deal with an equity stake in Sprint and a path to network sharing or an eventual merger would be a very sensible “second step” (following on from a straight MVNO),” he said.

Marci Ryvicker of Wells Fargo believes Comcast will be “the ultimate decision maker” as to which path will be taken. If they choose to move beyond MVNO status, both cable companies have track records when it comes to absorbing huge entities.

“We note Comcast has a strong history of successfully turning around assets and could contribute meaningfully to Sprint; NBCU is the clearest example,” wrote Amy Yong of Macquarie Research . “Meanwhile, Charter is continuing to integrate Time Warner, but has made meaningful progress.”

Comcast already dipped a toe in the wireless market in April with the launch of Xfinity Mobile through its MVNO with Verizon. Charter has indicated its intent to follow Comcast into that market next year. In May, the companies formalized their partnership to develop infrastructure for wireless operations.

 

More Digital

  • Terry Back chairman ACF

    Veteran U.K. Media Investor Terry Back Joins ACF as Chairman

    CANNES — Veteran U.K. film industry investor Terry Back has joined ACF investment bank as chairman. ACF, headed by CEO Thomas Dey, has been at the forefront of the M&A activity around independent TV and film production outfits, mostly in the unscripted TV arena. ACF is in the midst of expanding its activities in the [...]

  • Jay Frank

    Jay Frank, UMG Senior VP and Digital Music Veteran, Dies at 47

    Universal Music executive and digital music veteran Jay Frank died Sunday after a battle with cancer. He was 47. UMG chief Lucian Grainge remembered him in a message sent to the company. “Dear Colleagues,” it reads. “I’m deeply saddened to tell you that our colleague and friend Jay Frank has passed after a recurrence of [...]

  • Sam-Colby-The-Graveyard

    YouTube’s Sam and Colby Unveil ‘The Graveyard’ Paranormal Series Set in London

    Sam and Colby, YouTube’s favorite DIY paranormal investigators, headed to the U.K. for their next big ghost-hunting project. The duo today released the trailer for “The Graveyard,” a four-part docu-series shot in The Langham – by legend, London’s most haunted hotel – and an abandoned church graveyard. The project is their first international expedition. The [...]

  • Santos Dumont

    Mipcom: International TV Output Picture Changing for U.S. Majors

    The global import-export strategies of the U.S. majors are in flux as the world’s major content companies gather this week in Cannes for the annual Mipcom market and conference. Disney, WarnerMedia and the other handful of media conglomerates that control the vast majority of the U.S. market are in the midst of a radical transition [...]

  • Babylon Berlin

    ITV-Backed Streamer Cirkus to Launch European Drama Service Kritic (EXCLUSIVE)

    SVOD outfit Cirkus is expanding with Kritic, a new service programmed with premium non-English-language drama. The first launch will be in Sweden in December and feature big-ticket shows such as “Babylon Berlin” from Germany and “Gomorrah” from Italy. Cirkus has established itself in the Nordics and German-speaking territories. Kritic will roll out in Sweden before [...]

  • Mama K's Tesm 4

    Time Travel, Child Hosts, Diversity Build in Kids Shows, Says Glance Study

    CANNES —  More or less the only thing that hasn’t changed in Avril Blondelot’s MipJunior presentation of Kids Audience Successes Around the Globe was Blondelot herself. As well as, which she began by reporting, that “Alvin and the Chipmunks,” “SpongeBob SquarePants” and “Miraculous Ladybug” – in that order – still dominate the rankings for the [...]

  • Activision Blizzard

    Activision Blizzard Stock Recovers From Hong Kong Fallout

    Activision Blizzard saw its stock recover Friday despite continued backlash over its decision to punish a “Hearthstone” player for publicly siding with Hong Kong’s pro-democracy protesters. The company’s share price was up more than 2% Friday, closing at $54.82. Activision had been in the spotlight ever since Ng Wai Chung, a player of its “Hearthstone” [...]

More From Our Brands

Access exclusive content