Potential deal would combine the top two cable operators in the US with 30 percent total market share
American cable TV operator Comcast has agreed a $45bn (£27bn) deal to acquire its rival Time Warner Cable, creating a company that could effectively control three-quarters of the US cable industry.
Comcast will pay around $159 per share under the deal, the company confirmed, with the new company being led by Comcast Cable President and CEO Neil Smit.
“The combination of Time Warner Cable and Comcast creates an exciting opportunity for our company, for our customers, and for our shareholders,” said Brian L. Roberts, Chairman and Chief Executive Officer, Comcast Corporation.
Time to combine
Time Warner Cable, an independent company from former parent Time Warner, owns television channels CNN and HBO, and had been the subject of an eight-month takeover battle by a smaller cable operator, Charter Communications. It rejected a $60bn takeover bid last month, calling it “grossly inadequate”, but now it seems the lure of a bigger partnership has won out.
“This combination creates a company that delivers maximum value for our shareholders, enormous opportunities for our employees and a superior experience for our customers,” said Robert D. Marcus, Chairman and CEO of Time Warner Cable.
The combination, which would give roughly 23 percent of the merged company to Time Warner Cable shareholders, is subject to regulatory approval, although it does not appear to contravene any Federal Commission competition guidelines. The two companies expect to close the deal by the end of the year.
Comcast is the biggest cable television provider in the US and owns the NBC broadcast network, which it bought out for £17 billion in 2013, as well as the Universal film studio. The new company would become the largest cable provider in the US, with a combined subscriber base of around 30 million, representing just under 30 percent of the U.S. pay television video market. Its closest competitor, DirecTV, has about 20 million video customers.
“Through this merger, more American consumers will benefit from technological innovations, including a superior video experience, higher broadband speeds, and the fastest in-home Wi-Fi”, Comcast said.
The deal could also prove to be a major success for Time Warner Cable’s Chief Executive Rob Marcus, who only took over the job 1 January. Under the terms of his contract with the network, he could stand to make $50 million if he is replaced as CEO following a sale of the company.
The deal could also affect a possible partnership between Time Warner Cable and Apple, who were apparently teaming up to debut a new version of Apple TV. The deal would have seen the network providing content direct to Apple TV platforms, bypassing the need for the company to thrash out deals with individual channels and content owners, greatly streamlining the process of introducing Apple TV into consumers’ homes. Comcast, however, is reportedly much cooler on this idea, meaning the partnership could be off for the foreseeable future.
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