Comcast to buy rival for $45.2B
Deal for Time Warner Cable likely to face antitrust scrutiny
2/14/2014LOS ANGELES — Comcast, the nation’s largest cable operator, wants to get even larger.
Already the dominant player in providing pay television services to U.S. consumers, Comcast Corp. announced Thursday a deal to buy Time Warner Cable Inc.
It is the second transformative deal for Comcast in recent years, coming just months after it completed an acquisition of NBC Universal, the TV and movie studio. And the deal, if completed, could affect consumers across the country, although it is unlikely to reduce competition in many markets.
Comcast’s proposed $45.2 billion takeover of Time Warner Cable could face close scrutiny from U.S. antitrust regulators because of the deal’s potential to reshape the country’s pay TV and broadband markets.
The company resulting from the merger of the top two U.S. cable service providers would boast a footprint spanning from New York to Los Angeles, with a near 30 percent share of the pay TV market as well as a strong position in providing broadband Internet services.
The all-stock deal would put Comcast in 19 of the 20 largest U.S. TV markets and could give it unprecedented leverage in negotiations with content providers and advertisers.
The friendly takeover came as a surprise after months of public pursuit of Time Warner Cable by smaller rival Charter Communications Inc. and immediately raised questions as to whether it would be blocked by the Department of Justice or the Federal Communications Commission.
Time Warner Cable shares jumped 7 percent to $144.81, still substantially short of the $158.82 per share value that Comcast put on its offer, indicating investors’ worries about regulatory clearance. Comcast shares fell 4 percent.
“I don’t know if the deal is too big to fail to be approved but it is definitely too big to sail through either the Department of Justice or the FCC without serious, serious examination,” said former FCC Chairman Reed Hundt.
Comcast Chief Executive Brian Roberts said he was confident about getting the green light from regulators. He said the two companies plan to divest 3 million subscribers, so that their combined customer base of 30 million would represent just under 30 percent of the U.S. pay television video market. He said no decisions have been made on which markets to sell.
Time Warner serves parts of northwest Ohio, including Bowling Green, Waterville, Walbridge, Findlay, Fremont, Port Clinton, Gibsonburg, Bellevue, Tiffin, Napoleon, Defiance, and Bryan. Buckeye CableSystem is the dominant cable provider in the Toledo area.
In an email to The Blade, Time Warner Cable spokesman Michael Hogan said nothing would change for customers anytime soon. He said the company would keep customers well informed in the coming months about any developments that will impact their services.
He also said there would be very little impact on the vast majority of Time Warner Cable employees.
Comcast argued that the acquisition would be beneficial to consumers in that it would roll out its more advanced cloud-based set-top boxes to Time Warner Cable customers. It also said the deal would eventually result in higher broadband speeds.
“Significantly, it will not reduce competition in any relevant market because our companies do not overlap or compete with each other,” Mr. Roberts said.