Wall Street is facing the loss of about $250 million in fees after Comcast Corp. scrapped its $45.2 billion takeover of Time Warner Cable Inc.
JPMorgan Chase & Co., Citigroup Inc. and Morgan Stanley are among the banks that advised on the deal, which was called off Friday after objections from U.S. regulators. That collapse has also thwarted Comcast’s sale of 3.9 million cable-TV subscribers, partly to Charter Communications Inc., and is putting a third deal -- Charter’s $10.4 billion acquisition of Bright House Networks LLC -- in limbo as well.
The three deals would’ve yielded as much as $318 million in fees for 11 firms, a haul that -- if combined -- would be the biggest advisory windfall in Wall Street’s history, according to data from Freeman & Co. That doesn’t include fees for financing the deals.
“It’s definitely going to hurt,” said Jeff Nassof, vice president at Freeman in New York. “The M&A market has been fairly strong in general, so it’s not going to be as harsh as it might have been.”
Some consolation? Despite the collapse, some of those firms may still generate a combined $40 million to $60 million in breakup and retainer fees, according to filings and estimates provided by Freeman.
Also, the death of Charter’s Bright House deal isn’t certain, and Friday’s developments open the door for Charter to revive its own bid for Time Warner Cable. Advisers for Charter have already reached out to Time Warner Cable to begin friendly talks, people with knowledge of the matter said.
Time Warner Cable has the right to block Charter’s agreement with Bright House as part of its long-time arrangement to negotiate programming and other deals for the sixth-largest cable provider.
Barclays Plc, JPMorgan and PJT Capital LLC advised on Comcast’s bid for Time Warner Cable, with the latter two also on the company’s divestiture of subscribers to Charter. Citi, Morgan Stanley, Allen & Co. and Centerview Partners LLC advised Time Warner Cable.
LionTree Advisors and Goldman Sachs Group Inc. were hired by Charter on its acquisition of Comcast’s subscribers and Bright House, while Guggenheim Securities worked with Charter on the subscriber acquisitions.
The current highest yielding U.S. deal for banks is Comcast’s $72 billion acquisition of AT&T Broadband in 2001, which generated $270 million in advisory income, Freeman’s data show.
While $250 million is a painful figure for Wall Street, bankers are making it up elsewhere. There have been $1.1 trillion of deals announced so far this year, according to data compiled by Bloomberg. At this pace, 2015’s volume will surpass the $3.27 trillion seen in 2014, which was a seven-year high.