Advisers Could Lose $380 Million in Comcast-TWC Fees

By Liz Hoffman and Maureen Farrell 

Washington's opposition to Comcast Corp.'s $45 billion takeover of Time Warner Cable Inc. will reverberate to Wall Street, as bankers, lawyers and traders see fees and profits dashed at regulators' hands.

Bankers stood to collect an estimated $380 million in fees if the deal closed along with a pair of related, contingent transactions involving rival cable operator Charter Communications Inc., according to regulatory filings and estimates from consulting group Freeman & Co.

But Comcast is planning to drop its pursuit of Time Warner Cable, according to people familiar with the matter, after stiff resistance from U.S. regulators.

Charter's bankers at Goldman Sachs Group Inc. would miss the biggest fee pot, though the outcome will also sting other big banks and a handful of so-called boutiques.

The deal's demise would also reshuffle the rankings of M&A advisers known as "league tables." J.P. Morgan Chase & Co., a Comcast banker, would drop from second to third in Dealogic's 2014 U.S. tables by dollar volume of deal assignments, while Skadden, Arps, Slate, Meagher & Flom LLP, lawyers for Time Warner Cable's independent directors, would drop from first to third. Davis, Polk & Wardwell LLP, which advised Comcast, would drop outside the top 10.

Yet for advisers, hope springs eternal. A failed deal would restart what is widely expected to be a new round of consolidation of cable operators. Charter, for example, which had earlier lost out in its effort to buy Time Warner Cable, would be free to try again. Comcast, one of the hungriest buyers in telecommunications sector, could look for its next big target. And Bright House Networks LLC, a smaller operator whose sale to Charter had hinged on the Comcast deal closing, could find itself prey again.

Another group dinged: Traders that had bet on the deal going through. Time Warner Cable shares were roughly one-quarter owned by hedge funds as of Dec. 31, many of them so-called arbitrageurs who seek to profit from takeovers.

That said, investors broadly had been skeptical of this deal's chances for months--evidenced by Time Warner Cable's shares trading well under the implied offer price--which may help stem losses, as will offsetting bets known as hedges. Time Warner Cable shares fell 0.6% to $148.76 as of 4 p.m. Thursday, while Comcast gained 0.8% to $59.23.

The Comcast deal, struck 14 months ago, would be the second-largest takeover scuttled at the hands of U.S. antitrust regulators. Sprint Corp.'s planned takeover of MCI Worldcom, called off in 2000 after the Justice Department sued to block it, was larger.

It's not the first bum deal for Comcast. The company has now been involved in three of the 16 largest attempted takeovers to fail for one reason or another, according to Dealogic. It was outbid for MediaOne Group Inc. by AT&T Inc. in 1999 and rebuffed by Walt Disney Co. in 2004.

Write to Liz Hoffman at [e-mail] and Maureen Farrell at [e-mail]

Corrections & Amplifications

Time Warner Cable shares fell 0.6% to $148.76 as of 4 p.m. Thursday, April 23. An earlier version of this article reported the change and share price incorrectly.

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