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Comcast, Time Warner agree to merge in $45 billion deal Comcast, Time Warner agree to merge in $45 billion deal
(about 9 hours later)
Comcast has agreed to buy Time Warner Cable for more than $45 billion in stock, a deal that would combine the two largest cable providers in the country, according to people familiar with the matter. Comcast said Thursday it 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 combined company would be a communications 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 travel through those pipes since Comcast already owns the entertainment empire of NBC Universal. 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 anti-trust 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. 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 plans to offer shedding around 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 condition of anonymity because the deal was not final. 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 diverstment of customers, the deal would create a behemoth with 34 million cable subscribers in most major metropolitan areas, including Time Warner Cable’s home, the New York tristate region. With its broader reach, the combined company would also have more negotiating power with network broadcasters that rely on cable companies to distribute their content, critics say. 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.
Already, consumer groups are protesting the merger. Just two years after Comcast’s controversial merger with NBC Universal was approved, public interest groups say consumers have steadily suffered from increased monthly cable bills and few options for alternative broadband providers. The merger builds on Comcast’s strategy to transform itself from a cable television business into a broadband and media powerhouse. It has seen a slow but steady decline in cable television subscribers as consumers increasingly turn to broadband Internet services for entertainment and communications. Netflix, with 31 million subscribers, has exploded in growth while using as much as one-third of bandwidth on broadband networks during peak hours.
“Comcast will have unprecedented market power over consumers and an unprecedented ability to exert its influence over any channels or businesses that want to reach Comcast’s customers,” said Matt Wood, policy director at public interest group Free Press.. With its broader reach, the combined company would also have more negotiating power with network broadcasters that rely on cable companies to distribute their content, critics say. But the company said the merger helps reduce costs, or leads to “synergies,” which it estimates at $1.5 billion in operating efficiencies a year.
Comcast and Time Warner Cable don’t have overlapping markets, so antitrust regulators won’t view the merger with the same concerns they did with AT&T’s proposed bid with T-Mobile, experts say. That deal, which regulators rejected, would have eliminated a major national carrier and given consumers across the country fewer options. “The combination of Time Warner Cable and Comcast creates an exciting opportunity for our company, for our customers, and for our shareholders,” Brian Roberts, chairman and chief executive of Comcast, said in a statement.
When it acquired NBC Universal in 2011, Comcast agreed to so-called 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, according to a person familiar with the deal. Already, consumer groups are protesting the merger. Just two years after Comcast’s controversial merger with NBC Universal was approved, public interest groups say consumers have steadily suffered from increased monthly cable bills and few options for alternative broadband providers.
Some antitrust experts say such voluntary conditions that create a level playing field for Web video providers such as YouTube and Netflix will appease antitrust regulators. “Comcast will have unprecedented market power over consumers and an unprecedented ability to exert its influence over any channels or businesses that want to reach Comcast’s customers,” said Matt Wood, policy director at public interest group Free Press.
“They don’t compete directly for the business of pay TV consumers. Therefore the number of competitive choices for consumers will not change,” said Seth Bloom, a former general counsel of the U.S. Senate Antitrust Subcommittee. “The FCC approval is somewhat more uncertain.” Comcast and Time Warner Cable don’t have overlapping markets, so antitrust regulators won’t view the merger with the same concerns as they did with AT&T’s proposed bid with T-Mobile, experts say. That deal, which regulators rejected, would have eliminated a major national carrier and given consumers across the country fewer options.
If the boards of both companies approve the marriage and it passes regulatory scrutiny, the deal could close before the end of the year, a person familiar with the deal said. 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, according to the person familiar with the deal.
The price per share of $158.82 is about 17 percent above where Time Warner Cable shares’ closed in regular trading Wednesday. Some antitrust experts say such voluntary conditions that could create a level playing field for Web video providers such as YouTube and Netflix will appease antitrust regulators.
The merger trumps a proposal by Charter Communications to buy Time Warner for about $38 billion in cash and comes just a day after Charter said it was preparing a hostile take-over of Time Warner by proposing to replace its board. Analysts say Comcast has a strong chance of approval with antitrust regulators. They will argue that their cable business doesn’t compete directly in local markets with Time Warner Cable. The firm is also known as a lobbying powerhouse. Its executives are veteran negotiators with federal regulators, having won approval of the NBC Universal deal even when it was protested by many lawmakers and consumer interest groups. Its executive vice president, David Cohen, is a longtime Democratic insider who has hosted fundraisers for Obama and the Democratic National Committee. Earlier this week, he was invited with his wife to the White House state dinner for the president of France.
“They don’t compete directly for the business of pay TV consumers. Therefore the number of competitive choices for consumers will not change,” said Seth Bloom, a former general counsel of the U.S. Senate antitrust subcommittee. “The FCC approval is somewhat more uncertain.”
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 person familiar with the deal said.
The price per share of $158.82 is about 17 percent above where Time Warner Cable shares closed in regular trading Wednesday.
The merger trumps a proposal by Charter Communications to buy Time Warner for about $38 billion in cash and comes just a day after Charter said it was preparing a hostile takeover of Time Warner by proposing to replace its board.