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The deal is expected to be completed by the end of 2014

Big cable just got much bigger: Comcast confirmed that it has acquired Time Warner Cable (TWC) in an all-stock transaction. 

According to a joint press release by Comcast and TWC, the former acquired the latter for $45.2 billion, merging the two largest U.S. cable companies. 

"The combination of Time Warner Cable and Comcast creates an exciting opportunity for our company, for our customers, and for our shareholders," said Brian L. Roberts, Chairman and Chief Executive Officer, Comcast Corporation. "In addition to creating a world-class company, this is a compelling financial and strategic transaction for our shareholders. Also, it is our intention to expand our buyback program by an additional $10 billion at the close of the transaction.

"We believe there are meaningful operational efficiencies and the adjusted purchase multiple is approximately 6.7x Operating Cash Flow. This transaction will be accretive and will yield many synergies and benefits in the years ahead. Rob Marcus and his team have created a pure-play cable company that, combined with Comcast, has the foundation for future growth. We are looking forward to working with his team as we bring our companies together to deliver the most innovative products and services and a superior customer experience within the highly competitive and dynamic marketplace in which we operate."


[SOURCE: Compare Satellite]

The deal, which is expected to be completed by the end of 2014 (after approval by stockholders and regulators, of course), will give TWC investors 2.875 Comcast stock for each of their shares. TWC shares are valued at $158.82 a piece.
 
TWC shareholders will own about 23 percent of Comcast’s common stock, and the press release said Comcast plans to buy back an additional $10 billion of its shares. 
 
The deal will up Comcast’s free cash flow per share and produce savings of about $1.5 billion. The overall acquisition values TWC at at about $69 billion including net debt.
 
The National Cable Television Association said Comcast and TWC merged would account for almost three-quarters of the cable industry. 
 
This is sad news for Charter Communications Inc., which had been pursuing a potential deal with TWC since June 2013. Charter's offer to TWC was $132.50 per share. 
 
Charter won't likely trump Comcast's bid, but it could grab some extra subscribers from the acquisition. Comcast will reportedly divest about 3 million subscribers of the acquisition in order to keep its market share below 30 percent -- meaning Charter could potentially buy whomever Comcast is willing to sell.
 
Up until the Comcast acquisition, both Comcast and Charter were talking an asset sale after the supposed Charter acquisition of TWC. But a meeting last week reportedly ended with Comcast threatening to do the deal itself without Charter. Comcast wanted to do an all-stock deal, have a say in how Charter dealt with its proxy fight with TWC, and pushed Charter to divest more assets.
 
With Comcast jumping ahead and doing the deed itself, it has now gained more than 11 million residential subscribers, not to mention it also gets access to the New York City cable market. This will likely allow it to hash out better deals with content providers. However, big cable is now huge, with Comcast clearly dominating the market more than ever. We'll have to wait and see if the deal passes regulatory approval, but Comcast is likely hoping that won't be an issue if it sells off some of its customers. 

Source: Comcast



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monopoly charges
By genzai on 2/13/2014 12:46:01 PM , Rating: 1
It seems to me that this is where purist capitalist systems fail quite badly. The reasons presented for moving forward with this purchase/merger sound like a dull rendering of a Gordon Gecko presentation.

They talk about operational efficiencies (in other words, cutting a bunch of jobs now made redundant). How this can lead to better pricing or service for the consumer is beyond me. The pressure will be to increase prices and profits with fewer options available to consumers. Even media content owners will have less negotiating power.

Both companies, and as far as i can tell, especially Comcast have horrid, horrid reputations where customer service is at issue- meanwhile there is a strong consumer desire to decouple the cable company stranglehold on content and this movement, slow as it has been, can also be damaged by a more powerful cable monopoly.

In other words this seems to have the potential to significantly reduce consumer choice, consumer influence, content holder power, increase pricing, reduce already low service quality, cut a bunch of jobs and basically make some kind of incremental increase to the stock values or salaries of a relatively very few. Awesome sauce.

I hope the FCC blocks this. I hesitate to call this a monopoly move, since the current structure is already so broken (pretty sure that Comcast and TWC never compete in the same markets, so they already have regional monopolies), but this is still bad, bad, bad.

g\




RE: monopoly charges
By Motoman on 2/13/2014 1:03:11 PM , Rating: 5
Cable companies *do not* compete in a pure capitalist system. In fact, they are so far from it they can't even see it from there.

They operate in artificially-created and enforced monopolies, and sometimes duopolies. The number of areas in the USA where they actually compete on a free market is probably zero.

If the regulations creating these artificial kingdoms were eliminated, and true competition allowed into the market (like what happened with telephone service way back in the day) it would be a massive boon to the US consumer.


RE: monopoly charges
By superstition on 2/13/2014 1:38:09 PM , Rating: 2
Yeah right. We'd just have cartels instead of monopolies.

Capitalism = corporations buy politicians. It's just another form of socialism with an Ayn Rand badge.


RE: monopoly charges
By Motoman on 2/14/2014 12:06:03 PM , Rating: 2
No, capitalism is not a system in which the corporations control the government. That's fascism.

What you're seeing is categorically not capitalism. It's the obvious creep of fascism/corporatism that's taking over.


RE: monopoly charges
By superstition on 2/16/2014 9:03:03 PM , Rating: 2
Because the fictitious capitalism that people talk about doesn't exist.


"Nowadays, security guys break the Mac every single day. Every single day, they come out with a total exploit, your machine can be taken over totally. I dare anybody to do that once a month on the Windows machine." -- Bill Gates














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