07:13
Faizan
Earlier this month, on the 13th February 2014, Comcast announced an agreement to acquire Time Warner Cable in an all-stock deal worth over $45 billion, leaving the two companies' financial advisers standing to make between $50-75 million each on both sides. Marking a new wave of consolidation in the modern cable industry, the two behemoths share first and second places on the leaderboard of the top largest cable television providers in the USA.
Not too long before the announcement, Charter Communications had been eyeing up Time Warner Cable. However, Charter undercutted the price per share that Time Warner was looking for, around $160, by offering closer to $130. It was considered a done deal when Comcast came along and put the money, or more specifically stock, on the table.
On the day of the announcement, Comcast's CEO Brian L. Roberts explained that the acquisition will set the combined entity up for future growth. But the combination will not likely affect the estimated combined 33 million consumers; the two companies do not compete with each other in any local markets. The deal is supposedly to close by the end of the year, subject to the approval of regulators, who could potentially disprove the deal on grounds such as increased negotiating power with cable networks.
In an effort to appease the antitrust regulators, it has been reported that Comcast will make divestitures of roughly a quarter of Time Warner's customer base, which would bring the combined entity's customer base down to around 30 million, keeping Comcast from maintaining no more than 30% of the national market share. However, unlike Charter's largely debt-fueled offers, the Comcast-Time Warner Cable combination will accrue no additional debt and leave Time Warner shareholders with roughly 23% of the combined entity.
The deal could be considered transformative, happening just a year after Comcast's acquisition of NBC Universal. Charter on the other hand, one of the country's smaller cable television providers, seems to have missed its invitation to the party. However, it may well be a likely buyer of upcoming subscriber divestitures from Comcast, if all goes to plan and the deal does in fact officially go through. Charter will most probably look to pursue further consolidation through the acquisition of smaller cable television providers in the country too.
Aside from antitrust regulators, other threats to the closing of the deal include the possibility of shareholders of either company voting it down. The deal could also come to a halt if Comcast's shares collapse, but neither of these possibilities are particularly likely. Since the NBC Universal acquisition went ahead, the chances are not too bad for Comcast. However, Washington may still decide to kill the deal, even just for the sake of consumers. Perhaps surprisingly, there is to be no break-up fee between the two parties, which might even suggest they themselves are not convinced the acquisition will go through, despite Time Warner's CEO Robert Marcus arguing the very opposite.
Not too long before the announcement, Charter Communications had been eyeing up Time Warner Cable. However, Charter undercutted the price per share that Time Warner was looking for, around $160, by offering closer to $130. It was considered a done deal when Comcast came along and put the money, or more specifically stock, on the table.
On the day of the announcement, Comcast's CEO Brian L. Roberts explained that the acquisition will set the combined entity up for future growth. But the combination will not likely affect the estimated combined 33 million consumers; the two companies do not compete with each other in any local markets. The deal is supposedly to close by the end of the year, subject to the approval of regulators, who could potentially disprove the deal on grounds such as increased negotiating power with cable networks.
In an effort to appease the antitrust regulators, it has been reported that Comcast will make divestitures of roughly a quarter of Time Warner's customer base, which would bring the combined entity's customer base down to around 30 million, keeping Comcast from maintaining no more than 30% of the national market share. However, unlike Charter's largely debt-fueled offers, the Comcast-Time Warner Cable combination will accrue no additional debt and leave Time Warner shareholders with roughly 23% of the combined entity.
The deal could be considered transformative, happening just a year after Comcast's acquisition of NBC Universal. Charter on the other hand, one of the country's smaller cable television providers, seems to have missed its invitation to the party. However, it may well be a likely buyer of upcoming subscriber divestitures from Comcast, if all goes to plan and the deal does in fact officially go through. Charter will most probably look to pursue further consolidation through the acquisition of smaller cable television providers in the country too.
Aside from antitrust regulators, other threats to the closing of the deal include the possibility of shareholders of either company voting it down. The deal could also come to a halt if Comcast's shares collapse, but neither of these possibilities are particularly likely. Since the NBC Universal acquisition went ahead, the chances are not too bad for Comcast. However, Washington may still decide to kill the deal, even just for the sake of consumers. Perhaps surprisingly, there is to be no break-up fee between the two parties, which might even suggest they themselves are not convinced the acquisition will go through, despite Time Warner's CEO Robert Marcus arguing the very opposite.
Posted in: business
