Verizon CEO: We’d consider merger with almost anyone, including Comcast

No deal is imminent as Verizon CEO claims no one has the fiber to match Verizon.

Jon Brodkin – Apr 19, 2017 12:30 pm | 58

Verizon CEO Lowell McAdam said yesterday that he’d be willing to have merger talks with just about any company, including Comcast.

“If [Comcast CEO] Brian [Roberts] came knocking on the door, I’d have a discussion with him about it,” McAdam said in an interview with Bloomberg. “But I’d also tell you there isn’t much that I wouldn’t have a discussion around if somebody came and said, ‘here’s a compelling reason why we ought to put the businesses together.'”

Comcast declined comment when contacted by Ars today.

McAdam also said he’d be open to merger talks with Walt Disney or CBS. “Shares of all three potential merger companions rose on McAdam’s comments Tuesday,” Bloomberg wrote.

That doesn’t mean Verizon is going to announce a huge merger any time soon. In another interview on CNBC yesterday, McAdam said that Verizon hasn’t found the right fit for a merger from a network architecture standpoint. McAdam said Verizon is installing a lot of fiber to support its wireless network and that no company is matching what Verizon is doing.

McAdam reportedly said in December that a merger with Charter would make “industrial sense.” CNBC’s David Faber asked McAdam about that comment yesterday, and the CEO answered. “As we’ve looked at companies around the US, there is nobody building to the architecture that we’re talking about.”

McAdam then described Verizon’s plans to increase the density of fiber in cities such as Boston, saying, “A cable company would have customers, obviously, would have infrastructure, conduits, pole attachments. But it doesn’t have that kind of fiber.”

McAdam’s various comments about mergers aren’t contradictory. To summarize, he’s open to mergers with just about any company that can pitch a deal that makes sense, whether it’s another network operator or a programmer. But so far, McAdam is not convinced that other big network operators have the architecture to help Verizon’s fiber rollout.

Comcast says it has 145,000 miles of fiber installed across its 39-state territory, in addition to its extensive coaxial cable deployments. Verizon yesterday announced a deal with Corning to purchase up to 37.2 million miles of optical fiber and related hardware over the next three years.

“I think our shareholders expect us to look at every option, but I would tell you right now we haven’t seen the architectural fit, and we haven’t seen a willing seller and a willing buyer to have a meeting of the minds,” McAdam also said in the CNBC interview. “From a fiber perspective, nobody, whether you’re a fiber company or you’re a cable company, you don’t have the architecture that we’re talking about today.” For now, Verizon is building that architecture itself, he said.

Verizon and Comcast have 32 million Internet subscribers

Verizon is more interested in mobile Internet service than wireline home Internet these days and has concentrated its landline network in the Northeast US after selling off networks in other states. Even where it still operates wired home Internet service, Verizon has clashed with city officials who say the company has failed to complete fiber-to-the-home rollouts. New York City filed a lawsuit against Verizon last month, seeking a court order to force Verizon to finish installing fiber throughout the city.

But buying a cable network might still be attractive to Verizon because cable dominates the high-speed broadband market, while much of Verizon’s wireline network is stuck on outdated DSL technology. While Verizon has the most mobile subscribers in the country, Comcast is the nation’s largest cable company and home Internet service provider. A merged Verizon and Comcast would have nearly 32 million Internet subscribers (24.7 million from Comcast and 7 million from Verizon), about 9 million more than Charter, the second biggest home Internet provider.

Verizon and Comcast have overlapping territories, so many customers who have two Internet choices today would be left with just one if they merged.

There’s more to consider than home and mobile Internet service when it comes to a potential Verizon/Comcast merger. Both companies have expanded into providing video and online content over the networks that they operate. Comcast owns TV programmers such as NBCUniversal and various regional sports networks, while Verizon owns AOL and is buying Yahoo. Verizon wants a piece of the online video streaming market but has struggled with its Go90 offering. Comcast has reportedly acquired programming rights to offer TV channels nationwide, paving the way for a potential video service that would extend beyond Comcast’s cable territory.

Disclosure: The Advance/Newhouse Partnership, which owns about 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.