Comcast, the Nation’s No. 1 MSO, Will Buy Time Warner Cable, the No. 2 MSO in the Country, in an All-Stock Deal Valued at $45.2 Billion, Report Says

Feb 13, 2014  •  Post A Comment

Comcast, the nation’s No. 1 ranked MSO, with about 22 million basic TV subscribers, is buying Time Warner Cable, the nation’s No. 2 ranked MSO, with about 11 million basic TV subscribers, according to a number of media reports.

The story about the deal in the Los Angeles Times’ Company Town blog says the acquisition — expected to be announced later today, Thursday, Feb. 13, 2014 — is valued at $45.2 billion.

The story continues by noting that if approved, the deal "would create a video and Internet juggernaut with 30 million subscribers and operations in some of the country’s biggest markets, including New York City, Los Angeles, Chicago, Philadelphia and Washington, D.C.

"Besides its cable and Internet operations, Comcast also is the parent of NBCUniversal, which owns the NBC broadcast network, Universal Studios and several popular cable channels, including CNBC, MSNBC and USA Network. Time Warner Cable also has been expanding into programming and owns two sports channels in Los Angeles."

As for the details of the transaction, the Times article, by Meg James and Joe Flint, says: "Comcast would pay $158.82 a share for Time Warner Cable, a nearly 18% premium over the company’s latest stock price. Time Warner Cable shares closed Wednesday at $135.31. Comcast has offered 2.875 shares of its stock for each share of Time Warner Cable in the all-stock transaction."

Bloomberg’s story about the deal says: "Comcast Chief Executive Officer Brian Roberts will extend his lead in the U.S. cable-TV market after trouncing John Malone-backed Charter Communications Inc., which had courted Time Warner Cable since June. Holding out for a better offer than Charter’s $132.50-a-share bid allowed Time Warner Cable to deliver an almost 70 percent gain for shareholders since the end of May."

The Bloomberg story also notes: "The Comcast-Time Warner agreement caught Charter by surprise, people familiar with the matter said. Comcast and Charter had been negotiating an asset sale after a potential Charter acquisition of Time Warner Cable, according to the people.

"Those talks broke down last week, culminating in a meeting where Comcast Chief Financial Officer Michael Angelakis stormed out and threatened to do a deal for Time Warner Cable without Charter’s help, the people said."

A number of stories said that under the terms of the deal Comcast would sell off about 3 million subs, to make sure it has no more than 30 million subscribers, which equates to a national footprint of about 30 percent of the country. The L.A. Times article adds: "The 30 percent benchmark was the previous Federal Communications Commission (FCC) cap on cable ownership until a federal court tossed out that rule in 2009."

The Bloomberg story makes two additional observations:

"Comcast has made $65.6 billion of acquisitions over the past 10 years, according to data compiled by Bloomberg. It acquired the remainder of NBCUniversal from General Electric Co. for $16.7 billion in March, following through on the cable company’s purchase of a controlling stake in 2011.

"A tie-up between Comcast and Time Warner Cable would face tough scrutiny from the FCC, Craig Moffett, an analyst at MoffettNathanson LLC, said in an interview in January. The merged company would account for almost three-quarters of the cable industry, according to the National Cable Television Association."

In terms of the size of pay TV distributors if the deal goes through, after Comcast with its 30 million subs, DirecTV would be next, with about 20 million subs, followed by Dish with about 14 million subs, and then Verizon and Cox Communications, each with just under 5 million subs.

We urge you to click on the links above to both the L.A. Times and Bloomberg stories to read more details about this deal.

The deal was first reported by Comcast’s CNBC.

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