Comcast will buy Time Warner Cable for $45.2 billion in stock, or $158.82 per share.
The deal will combine America’s top two cable TV companies and make Comcast, which also owns NBCUniversal, a dominant force in both creating and delivering entertainment to U.S. homes.
Time Warner Cable shareholders will receive 2.57 Comcast shares for every Time Warner Cable share they own. Once the deal is final, they will end up owning about 23 percent of the combined company.
Charter had pursued Time Warner Cable for months but Time Warner Cable CEO Rob Marcus had consistently rejected what he called a lowball offer, saying he’d cut a deal for $160 per share in cash and stock.
Charter had planned to finance its bid with $25 billion in new debt. As part of a plan to pay off the debt quickly, the company considered selling off some of its territories after a deal had closed. Time Warner Cable’s Marcus had also balked at the huge debt burden the Charter takeover represented.
Comcast now plans to divest 3 million pay TV subscribers after the deal closes. With 22 million of its own pay TV customers and Time Warner Cable’s 11.2 million, the combined entity will end up with about 30 million subscribers when the deal is complete.
Comcast is taking the position that because Comcast and Time Warner Cable don’t serve overlapping markets, their combination won’t reduce competition for consumers. Comcast operates mainly in the northeast including its home base of Philadelphia and places such as Boston, Washington and Chicago. Time Warner Cable has strongholds around its headquarters in New York as well as Los Angeles, Dallas and Milwaukee.
In many of those areas, the combined Comcast/Time Warner Cable will face competition from rivals AT&T and Verizon, which provide both pay TV services and Internet hookups. Both AT&T and Verizon are growing quickly. They ended 2013 with 5.5 million and 5.3 million pay TV subscribers, respectively.
Comcast and Time Warner Cable are expected to save $1.5 billion in annual costs over three years, with half of that realized in the first year.
