Comcast buys Time Warner Cable for $45.2 billion: Is deal pro consumer, business?

Comcast buys Time Warner Cable for $45.2 billion: Is deal pro consumer, business?

Summary: Comcast positioned the Time Warner Cable deal as a way to improve service levels for consumers and transform into more of an enterprise communications provider.

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TOPICS: Networking, Telcos
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Comcast is bulking up---again. The cable and content giant said that it will acquire Time Warner Cable in a stock swap valued at $45.2 billion. Comcast positioned the Time Warner Cable deal as a way to improve service levels for consumers and transform into more of an enterprise communications provider as it launched its campaign for regulator approval.

Under the deal, Comcast will swap 2.875 shares for each Time Warner Cable share. Comcast said in a statement that it will create about $1.5 billion cost savings and boost free cash flow for shares.

The combined company will have annual revenue of $86.8 billion with EBITDA of $29.4 billion.

To get regulator approval, Comcast said it was prepared to divest assets.

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For Comcast, Time Warner Cable adds 11 million subscribers and access to the New York City area and competition with Cablevision. Comcast said it was willing to divest systems covering 3 million subscribers for a net gain of 8 million customers. Comcast CEO Brian Roberts, who last orchestrated a big deal by buying NBC Universal from General Electric, said the company will "yield many synergies and benefits in the years ahead."

On a conference call with analysts, Roberts said:

This transaction will create a world-class blue-chip company committed to innovation.

We will have best-in-class technology, along with a near national platform to drive efficiencies and a meaningful economies of scale.

We have a lot of experience integrating cable assets and our confident upon closing of the transaction, we can put these companies together quickly and efficiently. On the regulatory front, we believe that this transaction is approvable.

Comcast's Neil Smit, CEO of Comcast Cable, will run the combined company. Cable television is a saturated market and mergers and acquisitions are the fastest route to grow the customer base.

Time Warner Cable will give Comcast systems in New York City, Southern California, Texas, Ohio, Wisconsin and North and South Carolina.

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Comcast was already stumping for regulator approval and noted there were benefits to acquiring Time Warner Cable including the following:

  • More Wi-Fi hotspots;
  • Comcast's platform for streaming video;
  • Better Ethernet services and cloud services to enterprise;
  • Regional services;
  • Combined platforms for advertisers.

Overall, Comcast said its footprint will be less than 30 percent of the total cable market.

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Topics: Networking, Telcos

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43 comments
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  • A Little Scary

    Competition is what sparks innovation and keeps prices competitive. Every time we lose a communications company to mergers and acquisitions, it lessens competition. In addition, communications companies are no fans of Net Neutrality and are always looking for ways to get around it. The fewer Internet (and TV) providers we have, the more those who remain will control the industry and the Internet. Look to a future where you are told where you can go, what you can do, what you can watch and when you can watch it on the Internet - and at the same time paying higher and higher fees to do it. I say No to this merger. It is anti-competitive and anti-consumer.
    jpr75_z
    • Time to Split

      There needs to be a split between those that provide the content and those that deliver it. Comcast controls to much content and provides their content priority delivery service over independently sourced content. I say, let them merge and then split them up.
      MichaelInMA
      • Ya

        I agree. When I went to school for Radio and TV Production a good while back, I remember learning about regulations that restricted the number of media outlets a single entity can own. This was to ensure no one interest controlled the information we consume. This can be dangerous.

        Where the heck did these regs go? The are obviously not in place any longer and we are starting to see the effects by certain media outlets pushing an obvious agenda. Sometimes the choice of news / info covered and not covered speaks volumes to this issue of information control.
        djmik
        • The ownership rule was overturned...

          with the Telecommunications Act of 1996.

          Right now six companies own about 90% of the radio stations in the US.

          A merged Comcast/TWC will control 35% of all cable in the US.
          msalzberg
    • That assumes there was competition to begin with

      I think looking at this at a national scale, sure, there are multiple cable companies / ISPs. But, how many do you have in your area? I am lucky to have a FiOS and Comcast option. It does keep prices a bit lower in my area but I understand I am the exception, not the norm.

      If we as consumers could speak with our wallets (and no, doing away with any service is not an option for most), then I would call that true competition, such that each company would be compelled to innovate and offer competitive pricing in order to keep customers.
      djmik
  • They don't overlap much

    so it's not going to matter. It's not like you get a choice on cable service providers, you take what you are given.
    Tony Burzio
    • TWC vs Verizon

      Not necessarily true. In NYC you can choose between Time Warner Cable or Verizon FIOS; you CAN choose. If we are speaking strictly TV, then you can add DirecTV and Dish to the mix.
      davidr69
    • nope! this is like

      apple buying M$ because "they 'don't overlap much"... The customers and partners loose when these mergers occur!
      LlNUX Geek
    • it matters to me because

      I have internet through TWC in Raleigh, NC.

      TWC has no data caps, they do not throttle netflix.

      Comcast has data cap and throttles netflix, etc.

      So, it matters a lot.
      GrabBoyd
  • Who is left to be big competition for Comcast ?

    Seems like this is building up a pretty big monopoly (I know most markets have a local monopoly, but that is typically renewed every few years). This seems to be leaving little to no competition for Cable TV choices by municipalities.
    jkohut
    • Innovation...

      Current TWC customers will see an initial benefit from this most likely. Time Warner for years now has lagged industry standards especially in their broadband speeds. For example, their standard Roadrunner tier was 7mbps down and 256kbps up as recently as 2011, which was laughable. Bringing bandwidth in TWC areas in line with current Comcast offerings will be great for the consumer. However, long term I see this stiffing innovation. The fewer companies controlling the Internet the worse it is for everyone.
      bchristian1985
      • thats not true

        their speeds are comparable to other cable internet speeds. In my area the min speed is 10+mbps download 1 Mbps upload.

        Comcast is cr@p- they throttle, impose data caps.
        GrabBoyd
  • Less competition; what's not to like?

    Comcast has all this great capacity and bandwidth from which consumers can benefit ... at no additional cost? Waiting to see what happens to my bill ...
    davidr69
  • I don't like this...

    I was hoping that a smaller but significant cable operation like Charter or Cox would have ended up buying Time Warner. This is pretty much just creating a monstrosity. If this goes through, Comcast will pretty much be like Ma Bell was back when the government broke them up, with little need for competition and innovation. It's really pretty scary.
    bchristian1985
  • Gotta be a joke

    Putting the words Pro-Consumer and Corporate America is probably the most disingenuous thing that I have heard all year.
    Astringent
  • Comcast has improved

    When I first signed up for Comcast again after moving -- and I'd been a customer 12 years up north -- I was aghast at how bad its service was, in Houston. But it was better than Embarq, so I stayed.

    I'm glad I did, now. When I started, the cable box was a nightmare, the modem was too, and I was lucky to get one machine hooked up via ethernet. But today, they replaced all that, and now four machines are plugged into the modem for no added cost. Cable is still sometimes glitchy, but rarely.

    Further, the internet service is great. Smooth, maybe twice or three times faster than when I first signed up. Granted, back then I paid something like $100 a month, but now, $160. But now, the Xfinity works wonderfully, still with occasional glitches but with a better selection than ever, especially its online function for watching shows.

    When I started with them, I complained almost daily. Now, almost never.

    Okay, the email is still stupid, and Comcast's website is one big mass of confusion and jumping pictures. But I rarely need to go there. I download the email. Thunderbird or Outlook or Outlook Express, work just fine.

    Service is better than ever. Turns out the initial glitches were due to conversion from analog to digital. The Comcast folks are helpful. Granted, you no longer get to call Comcast 24/7. That is a problem. Else, it's much better.

    Some things need economies of big scale to become efficient. I submit that's true here. Since in any city the cable providers tend to be only one or two anyway (and that because they need a huge local market to provide good service at affordable prices), I'm betting the Time-Warner deal will be good for customers.

    Comcast has the right attitude. That's the important thing. They do care about the customers, and they continually work at improving it.

    So, having been an irascible customer during the first year in Houston, I'm happy for Comcast, and wish them the best.
    brainout
    • *Paid for by Comcast*

      Take your paid advertisements elsewhere.
      eAbyss
  • Capitalism at work

    It's frightening how everything is becoming monetized and monopolized. Very little is free and not homogenized for corporate distribution.
    primartcloud
    • free

      TANSTAAFL
      raleighthings
  • Bad news!

    This buyout means less competition (read: only one choice) for too many people. What's worse, though, is that it expands Comcast's totally incompetent tech support service to so many more people. Sad, very sad news!
    rab@...