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Report of Verizon-Charter merger talks pose questions for telecom industry, antitrust enforcement, researcher says

Thursday, January 26, 2017

LAWRENCE — The exploration of a Verizon-Charter Communications merger presents interesting questions for the telecommunications industry and how the new Trump administration will handle potential antitrust questions, according to a University of Kansas expert on mergers and acquisitions.

George Bittlingmayer, Wagnon Distinguished Professor of Finance in the KU School of Business, is available to discuss reports of Verizon executives approaching cable and broadband provider Charter about combining with the wireless carrier. Bittlingmayer's research interests include mergers and acquisitions as well as the effect politics and regulation have on business and financial markets. He served as a visiting economist at the Federal Trade Commission.

"I see two major themes. First, the telecom sector has been consolidating, with providers trying to provide one-stop-shopping for cable, wireless and mobile coverage against the background of changing technology and changing consumer choices — no land line and cable cutting, being two that come to mind," Bittlingmayer said. "Second, there are the regulatory issues, in particular how the new administration would look at a deal like this. From a traditional antitrust standpoint, combining a phone company with a cable company would not raise anticompetitive issues — neglecting the overlaps, which can be addressed and often are. The wildcard here is whether people's unhappiness with their cable and mobile phone providers would translate into some grandstanding and arm-twisting on the part of the new administration for political benefit."

He added that so far news reports haven't focused on whether the merger would make financial sense.

"Are the parties capable carrying it out well? Is Verizon so invested in doing a deal that it will overpay?" Bittlingmayer said. "As of this morning, Charter's stock is up 8 percent, which is typically for the to-be-acquired firm, but Verizon is down about 7 percent versus the S&P 500 over the last few days, down a good bit more than is usual in a case like this."

To speak with Bittlingmayer, contact George Diepenbrock, KU News Service public affairs officer, at gdiepenbrock@ku.edu.

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