Washington Makes a Broadband Hash

[Commentary] Charter bid $132 a share for Time Warner Cable in 2014, and was bested by Comcast at $159. On May 26, Charter agreed to pay $195. Indeed, it will pay a multiple over cash flow that appears to be unprecedented in the annals of big cable deals. That’s pretty good price-appreciation considering that Time Warner Cable’s most profitable business is broadband, which in the meantime has come under monopoly regulation by the Obama Administration.

Surprise you? It shouldn’t. Incumbent broadband CEOs had been saying for months they would invest less under Title II. Guess what? Shareholders like the sound of less investment. Investment is a cost. Regulators were also at pains to say there would be no attempt to regulate broadband prices. Guess what? Shareholders like the idea of continuing to charge whatever they want for broadband even as a regulatory shroud descends that will deter new competitors. It was ever thus.