Thursday, February 13, 2014

Comcast To Buy Time Warner Cable for $45.2 Billion

Comcast has agreed to buy Time Warner Cable for $45.2 billion in stock, a deal that would combine the two largest cable providers in the country.  The merged company would be a communications and media juggernaut with far greater influence than any of its peers. It would not only control the “last mile” connections that pump cable and Internet services into homes and businesses but also a huge swath of the content that travels through those pipes because Comcast already owns the entertainment empire of NBC Universal.

The proposed merger is expected to receive close scrutiny from federal antitrust regulators who will focus on whether the merged company would have too much market share — or whether it could stifle content creators and online video companies such as Netflix.

Separate from that review, the Federal Communications Commission would have a much broader mandate to determine if the deal is in the public’s interest.
To head off regulatory concerns, Comcast said it plans to offer to shed about 3 million subscribers in order to keep its ownership of the entire cable marketplace below 30 percent, a figure television programmers say is the threshold for competition in licensing negotiations, according to a person familiar with the deal who spoke on the condition of anonymity.

Before any divestment of customers, the deal would create a behemoth with 33 million cable subscribers in most major metropolitan areas, including Time Warner Cable's home, the New York tristate region and in southern California, Texas, the Carolinas, Ohio and Wisconsin. Time Warner Cable does not serve the Washington, D.C., area.

When it acquired NBC Universal in 2011, Comcast agreed to “net neutrality” conditions that prevent it from prioritizing its own content over a competitor such as Netflix. Comcast is expected on Thursday to offer similar restrictions in its merger with Time Warner Cable.

If the boards of both companies approve the merger, and it passes regulatory scrutiny, the deal could close before the end of the year.  The price per share of $158.82 is about 17 percent above where Time Warner Cable shares closed in regular trading Wednesday.  (Wash Post, 2/13/2014)

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