Comcast-TWC Merger Will Mean 'Short-Term Kick in the Pants' for Partners

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The $45 billion merger of Comcast and Time Warner Cable will cause some pain and disruptions within the channel, but, over time, partners will profit from the ability to sell fast network services to organizations throughout the country.

That’s the takeaway among from analysts at Current Analysis and New Paradigm Resources Group (NPRG).

First, it looks like it’s going to be a while before there’s any clarity about the combined channel structure. Indeed, Channel Partners asked Comcast and TWCBC for their input; Craig Schlagbaum, Comcast’s channel chief, said he is not able to comment and TWCBC has not responded to Channel Partners’ inquiry.

To be sure, it could be months before partners have more definitive insight into Comcast’s channel plans. In the interim, Craig Clausen, executive vice president of NPRG, predicts a “short-term kick in the pants” from “the common distractions associated with integrated two large companies and the emphasis the combined company will initially place on its direct sales strategy.”

“Until this is sorted out, it’s challenging at best for any organization to articulate a coherent channel approach,” he added.

That’s because Comcast will be tied up with navigating intense regulatory scrutiny over the proposed transaction. But when the merger is completed, Cindy Whelan, principal analyst, business network and wholesale services for Current Analysis, expects Comcast to consolidate partners under its channel program framework, rather than TWC’s.

“Comcast restructured its program a couple of years ago, bringing in an exec with a great track record in channel development (Schlagbaum) and adding dedicated support people,” Whelan said. “It looks to me like it might be a stronger program in terms of resources allocated to working with the channel, compared to TWC. Comcast will certainly evaluate TWC partners to determine relationships going forward. Relationships with master agents already selling for both operators will likely remain in place, assuming metrics are being met, with contracts revised at some point.”

However, Whelan said Comcast should be taking time during the regulatory review process to develop its post-approval channel strategy; that way, once everything is nailed down, the company can distribute accurate information to partners. In the immediate future, agents and VARs can look forward to business as usual, she said. But as the merger receives governmental blessings and begins to integrate, complications stand to arise for partners selling both Comcast and TWC.

“Partners will be trying to sell a wide range of services with different speed tiers, prices, technical support systems and so on,” Whelan said. “The premise is that the merger will make it easier for Comcast, and presumably its partners, to sell to multsite businesses, but the reality is that it is going to take a very long time to get service sets, pricing and support rationalized, and in the interim it might get messy depending on how Comcast manages the process.”

Once circumstances settle down, though, Clausen predicts that partners will benefit.

“We expect that partner revenue will increase as the combined company improves its business services portfolio and expands its reach,” Clausen said.

To be sure, the appeal of the Comcast-TWC union is that organizations with multiple locations may connect those facilities with high-speed services from one provider. Partners are telling Channel Partners they like that aspect of the deal, but they harbor fears about compensation and processes.

Whelan said it’s too early to know whether those fears are legit.

“I expect Comcast to work with partners with an eye to developing a strong channel, but it’s quite likely that there will be some partners who are not happy with the outcome,” she said.