Comcast is the nation’s largest cable and Internet provider whereas Time Warner Cable is the nation’s second largest. The two are also some of the most universally reviled among American consumers. Now both companies are joining forces.
Comcast and Time Warner Cable announced today that the two companies would be merging thanks to a deal that will see Comcast buy Tim Warner Cable for $45.2 billion. The two claim the merger “will create a leading technology and innovation company.”
“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. “In addition to creating a world-class company, this is a compelling financial and strategic transaction for our shareholders. Also, it is our intention to expand our buyback program by an additional $10 billion at the close of the transaction. We believe there are meaningful operational efficiencies and the adjusted purchase multiple is approximately 6.7x Operating Cash Flow. This transaction will be accretive and will yield many synergies and benefits in the years ahead. Rob Marcus and his team have created a pure-play cable company that, combined with Comcast, has the foundation for future growth. We are looking forward to working with his team as we bring our companies together to deliver the most innovative products and services and a superior customer experience within the highly competitive and dynamic marketplace in which we operate.”
As expected, Time Warner Cable is on the innovation bandwagon as well saying that this merger is only good for consumers and, more importantly, its shareholders.
“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. “Comcast and Time Warner Cable have been the leaders in all of the industry’s most important innovations of the last 25 years and this merger will accelerate the pace of that innovation. Brian Roberts, Neil Smit, Michael Angelakis and the Comcast management team have built an industry-leading platform and innovative products and services, and we’re excited to be part of delivering all of the possibilities of cable’s superior broadband networks to more American consumers.”
Like all mergers and acquisitions, Comcast’s bid to absorb Time Warner Cable is subject to regulatory approval. That’s probably not going to be a concern, however, as Comcast has already thought this through. Comcast notes that this merger would bring in 11 million more subscribers bringing its total subscriber count to 33 million. Comcast says its willing to “divest systems serving approximately 3 million subscribers” to “reduce competitive concerns.”
In other words, Comcast and Time Warner Cable are prepared to do anything to get this deal through. By merging, they will become the largest and most powerful cable and Internet provider in the nation. Even if their consumer approval ratings continue to plummet, the woeful state of Internet provider regulation in the U.S. would give consumers no recourse.
That being said, this is far from a done deal. We can only hope that the FTC and FCC grow a backbone and bar this deal from going through on grounds of consumer protection. As much as Comcast and Time Warner Cable say this deal is good for consumers, Comcast’s data caps and Time Warner Cable’s abysmal customer service would beg to disagree.
Image via Comcast