Comcast Buys Time Warner Cable For $45 Billion
Cable giants Comcast and Time Warner Cable are looking to combine their powers and resources, as the former is hoping to shell out $45 billion for the latter.
If the pending deal is approved, the combined groups will be the country's dominant provider of television channels and Internet services. Time Warner Cable owners will be offered 2.875 Comcast shares for each share they own, valuing Time Warner Cable at about $158.82 per share.
The two companies are expecting the merger to take effect by the end of this year, but regulators are more likely to take a close look at the potential impact on consumers. Comcast, in an attempt to address those concerns, said it was prepared to divest about 3 million subscribers. It would still have about 30 million retail customers, though.
The proposed deal ends months of positioning for control of Time Warner Cable, the second biggest U.S. supplier of cable television, with about 11 million subscribers in cities such as New York and Los Angeles.
Comcast President and CEO Brian Roberts said there were compelling strategic and financial reasons for the acquisition. The merger will generate about $1.5 billion in savings and will boost Comcast's cash flow, according to the company's press release. It will be tax feee to Time Warner Cable shareholders.
By adopting Time Warner Cable as its own, Comcast will gain even more leverage over the country's marketplace for television, broadband internet and phone services. Already the company has about 23 million television subscribers in markets like Philadelphia, where it is headquartered.