Comcast facing 'one tough review'

"Unfortunately for Comcast," despite the "powerful lobbyists" working to push approval of its planned acquisition of Time Warner Cable, the Federal Communications Commission has put together a merger review team that don't look likely to "rubber stamp" anything, writes bond analyst Dave Novosel in a report to clients of Gimme Credit LLC, new York.

Team includes:
   - William Rogerson, Northwestern U economist and ex-FCC Chief Economist, who opposed the Comcast/NBC deal on grounds of "significant competitive harm, while pay TV customers would face huge increases"
   - Hilary Burchuk, "who represented the Justice Department in its lawsuit against the proposed merger of AT&T and T-Mobile," which the goernment ultimately rejected -- "the position several critics have taken with regard to the Comcast acqusition of TWC"

That adds up to "intense scrutiny." Novosel still thinks the deal will be approved -- with conditions: more customer divestitures, "additional net neutrality promises," guaranteed content.

Of course, he adds, Comcast "is doing just fine without TWC:" NBC advertising has gained while other networks are falling. Comcast keeps signing new customers. The company in April spent $320 million for mobile-ad platform FreeWheel Media, which will give it valuable ad data, though Comcast has promised not to exploit this for NBC's benefit.

Bottom line: Comcast can afford TimeWarner Cable thanks to its "enormous cash flow" and the expense cuts and savings that will likely follow a merger. So Gimme Credit is recommending Comcast bonds, at current spreads.