Citigroup telecom analysts Jason Bazinet and Leo Culp want Comcast to buy Time Warner Cable. They say the combination could shave $1.6 billion from yearly "programming costs" (that's what cable pays networks) and $1.1 billion "in other cost savings." That's enough, they say, to justify the estimated $15 billion Comcast would have to borrow to fund a $19 billion TWC purchase.
The "savings" would mean lots of job cuts. Also lots of fees for Wall Street banks like Citi. The analysts predict higher profits and higher share values. They're not predicting any of the savings will be passed to consumers as lower fees.
A deal would also "simplify Comcast's wireless strategy," making it more competitive with Verizon, by combining the partners' shares of Clearwire and SpectrumCo. And it would "limit any bidding war down the road for Cablevision," the big New York cable company, presumably by establishing one big bidder to intimidate others.
Combined, Comcast and TimeWarner would own 37% of U.S. cable -- above the 30% limit imposed by former Federal Communications Commission chief Kevin Martin, but that was struck down in court recently, as my colleauge Bob Fernandez wrote here.
"We have no evidence that a Comcast-Time Warner Cable deal is in the works," the analysts admit. Reuters quotes Comcast coo Steve Burke, at a Bank of America conference, saying the court decision doesn't change Comcast's strategy of only doing deals that make financial sense.