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Wall Street lost big in Comcast–TWC merger collapse

J.P Morgan Chase could lose coveted financial ranking over failed deal


Tim Sampson


Posted on Apr 24, 2015   Updated on May 28, 2021, 11:54 pm CDT

Despite being casual Friday, it’s safe to assume that today’s not a great day to be in the corporate offices of Comcast. But they aren’t the only company stinging from the collapse of a proposed $45 billion buyout of Time Warner Cable.

A number of Wall Street banks, including J.P. Morgan Chase, lost out big with the Thursday’s news that Comcast is throwing in the towel on it’s 14-month pursuit of Time Warner Cable. The deal unravelled just hours after the Federal Communications Commission (FCC) recommended that the proposed merger be reviewed by a federal judged over antitrust concerns.

For Comcast, the nation’s largest cable provider, it means missing out on the chance to gobble up its number two competitor and thoroughly dominate cable and high-speed Internet access across the United States. But for 14 different Wall Street banks, it means losing out on nearly $400 million they stood to gain from what the Wall Street Journal described as one of the “biggest deal-related paydays in years.”

According to WSJ, advisory fees alone were set to surpass $320 million, with an additional $60 million in other fees. That would have set a record exceeding the roughly $270 million Wall Street made in 2001 from Comcast’s purchase of AT&T’s broadband service.

Part of what drove the cost of the deal so high were the “multiple, interlocking transactions” that sprang up around the proposed deal, WSJ reporter Liz Hoffman writes. Contingent on Comcast purchasing Time Warner Cable were two separate deals involving Charter Communications, a company that had previously attempted to purchase Time Warner.

If the Comcast-Time Warner Cable deal had gone through, Charter was set to purchase Bright House Networks LLC, a smaller cable and Internet provider. It also would have purchased a portion of Comcast’s subscribers that were to be sold off in an effort to ease monopoly concerns. These two deals were valued at $30 billion and also stood to generate tens of millions of dollars in fees on their own.

Of all the banks associated with this massive, multi-faceted deal, Chase had the most to gain, roughly $25 million. Now, with the deal’s collapse, both Chase and the law firm Skadden, Arps, Slate, Meagher & Flom LLP not only miss out on a major payday, but the WSJ reports that they are likely to lose their “coveted spots” on Thomson Reuters’ rankings of mergers and acquisitions firms, which would have allowed them to attract other major clients and charge higher fees.

Photo via Pink Cow Photography/Flickr (CC BY 2.0)

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*First Published: Apr 24, 2015, 5:59 pm CDT