Verizon-Cable Deal Verging on Approval?

Verizon Wireless, the joint venture between Verizon (NYSE: VZ  ) and Vodafone (NYSE: VOD  ) , may be on the cusp of finally getting regulatory approval of the blockbuster deals it made with several cable companies late last year, according to The Wall Street Journal.

The Journal cited unnamed sources that say Federal Communications Commission Chairman Julius Genachowski will begin the approval process this week. The Department of Justice is also about to drop its antitrust-related objection to the deals, according to the sources.

One of those deals had Verizon paying $3.6 billion to SpectrumCo, a consortium of cable companies that includes Comcast (Nasdaq: CMCSA  ) , Time Warner Cable (NYSE: TWC  ) , and Bright House Networks, for a cache of unused wireless spectrum. The other deal was made with Cox Communications for $300 million worth of spectrum.

The component of the SpectrumCo deal that had been holding up approval was its provision for cross-marketing of Verizon's services with those of the cable companies. Critics of the arrangement -- which have included consumer groups, other telecoms, and the chairman of the Senate Antitrust Subcommittee -- have called the cross-marketing components nothing more than non-compete clauses. For the deals to go through, Verizon and the cable companies have had to agree not to cross-market their products where they compete head-to-head for Internet, TV, and phone customers.

One of the sticking points for the DOJ was the potential for Verizon and Comcast to continue their cooperation indefinitely, or, as Comcast Cable President Neil Smit has said, into "perpetuity." But it seems the new definition for perpetuity is five years: The two companies have now agreed to limit the term of their cross-marketing ventures to that length of time, after which they will have to reapply for approval.

Last week Sprint Nextel (NYSE: S  ) CEO Dan Hesse railed against the growing duopoly power of Verizon and AT&T. If the deals are approved with only minimal throttling of their potentially anticompetitive tenets, then Sprint's voice, already one of the most critical of the Verizon-cable deals, will probably become a lot shriller.

For many investors, dividends are of supreme importance, and companies like Verizon and AT&T are certainly hard to resist for their dividends. But there is another telecom whose payout yields almost double theirs. Frontier Communications is the name of that company, but no investor should make a move on it without first signing up for this report. It's a must-read for anybody with an interest in Frontier. Make sure to claim your copy today by clicking here.

Fool contributor Dan Radovsky owns shares of AT&T. Motley Fool newsletter services have recommended buying shares of Vodafone Group. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1984156, ~/Articles/ArticleHandler.aspx, 11/23/2014 12:16:10 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement