Why Comcast Needed an Excuse to Turn Its Attention Elsewhere

[Commentary] Comcast CEO Brian Roberts made the rumors official: Comcast is dropping its bid to buy Time Warner Cable. Certain regulators and politicians will claim victory. But that’s because they don’t understand the industry they are supposed to manage. In fact, despite the obvious egg on the face, Comcast executives either already know or will soon realize that losing this deal this soon is one of the better things to happen in a long time. Because Comcast needs to direct its attention elsewhere immediately -- or miss the biggest shift in pay TV history since the advent of cable itself. Once it became clear that regulators were going to treat this deal like we were still living in 1985, Comcast executives were smart to realize that wasting a year trying to accommodate regulators’ concerns is a colossal waste of time when there are other, more pressing issues to confront.

Remember that when the deal was announced, HBO still wasn’t going direct, Sling TV didn’t exist, and Verizon hadn’t announced a national, over-the-top pay TV offering. Times have changed and in many regards, that’s the competitive field that Comcast needs to set its sights on, not the mucky and overregulated business of putting cables in the ground and obsolete set-top boxes in people’s homes. Yes, Comcast could have consummated this deal and used those extra revenues to help finance exactly that kind of over-the-top solution. But it would lose at least a year in doing so, a year during which everyone from Apple to Verizon, Netflix to Amazon, Sony to Sling TV, will have shifted the entire pay TV landscape, making Comcast a profitable provider of bits to those services.

[James McQuivey is vice president and principal analyst at Forrester Research]