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Angelakis: TWC Deal Could Help Boost Business Services

Business services growth could be just one of the beneficial by-products of the pending Comcast/Time Warner Cable merger, Comcast vice chairman and chief financial officer Michael Angelakis told an industry audience Tuesday.

Angelakis, speaking at the Morgan Stanley 2014 Technology, Media & Telecom Conference in San Francisco, said that adding markets like New York and Los Angeles should help Comcast extend its business services clout, especially with hard-to-capture enterprise customers.

Business services is currently a $3.5 billion business for Comcast, with about $3 billion of that revenue coming from small customers with less than 20 employees. While the company has made some headway in medium sized businesses with less than 250 employees – generating about $600 million in annual revenue and growing – TWC could help the cable giant crack the Enterprise segment, or large businesses with more than 250 employees.

“The Enterprise side is one we haven’t begun to move into, Angelakis said. “But having access to the two premiere markets [New York and Los Angeles] and Dallas as well and having access to 19 of the top 20 markets in the country, we think that is an enormous growth opportunity for us.”

Angelakis added that the company feels confident that it would be able to extract about half of the expected $1.5 billion in combined synergies in the first year after the deal closes, with 25% achievable in the second year and the rest in the third year. Angelakis reiterated that most of those synergies would come from eliminating redundancies and operational efficiencies, with programming cost savings being in the minority.

The combined Comcast/TWC also is expected to adhere to Net Neutrality rules – it was part of the consent decree that allowed Comcast to take a majority interest in NBC Universal and would apply to the TWC deal as well, Angelakis said.

“From a principal perspective, we’ve always believed in having an open Internet; we’ve always believed in Net Neutrality,” Angelakis said. “…We think it’s the right thing to do from a consumer perspective.”

The Comcast CFO also commented briefly on the cable giant’s landmark deal with Netflix, whereby the subscription VOD service will pay Comcast for a higher quality broadband stream for its customers on Comcast's network. Angelakis said Comcast’s motivation for the deal was not to extract more revenue out of the SVOD service, but to provide customers with a better video experience.

“For months we have been talking to them about what’s an appropriate interconnect agreement and we think we have a commercial agreement with them that is sound for both companies and the benefit is really to both our customers,” Angelakis said. “…The dollars articulated are quite de minimis. This is just a normal commercial relationship.”