) is exploring several options to get regulatory approval of its
proposed acquisition of
Time Warner Cable Inc.
). Recently, both the Financial Times and Reuters reported that
Comcast is negotiating with
Charter Communications Inc.
) to divest around 3 million video subscribers of the combined
Comcast-Time Warner Cable entity.
In Feb 2014, Comcast reached an agreement with Time Warner
Cable to acquire the latter in an all-stock deal valued at around
Liberty Media Corp.
), which controls a 27.3% stake in Charter Communications, was
also aggressively pursuing the idea of Charter Communications
taking over Time Warner Cable. However, it lost to Comcast in the
The merged entity of Comcast and Time Warner Cable will have
around 33 million pay-TV (video), 32 million high-speed broadband
(Internet) and 16 million telephony (voice) subscribers. The deal
is expected to face tough scrutiny and close monitoring by
regulator, Federal Communications Commission (FCC) and is
expected to close within a year.
In order to avoid antitrust restriction, Comcast has decided
to divest around 3 million Time Warner Cable video subscribers to
maintain its total market share at 30% of the U.S. pay-TV
industry. Several industry researchers have valued these 3
million subscribers between $18 billion - $20 billion.
The FCC may also ask Comcast to spin-off these subscribers as
a separate entity. If Charter Communications takes over that
part, it will create another formidable player in the U.S. cable
TV market with the fourth largest subscriber base. Notably,
Charter Communications currently has approximately 4.2 million
We believe that this deal will benefit both the companies.
Comcast can avoid antitrust measurers. The company already
assures FCC that its merger with Time Warner Cable will not
result in higher prices for cable TV and high-speed Internet
packages. On the other hand, Charter Communications will achieve
necessary scale to remain competitive in the intensely
competitive U.S. pay-TV market.
Currently, Comcast, Time Warner Cable, Charter Communications
and Liberty Media, all carry a Zacks Rank #3 (Hold).
CHARTER COMM-A (CHTR): Free Stock Analysis
COMCAST CORP A (CMCSA): Free Stock Analysis
LIBERTY MEDIA-A (LMCA): Free Stock Analysis
TIME WARNER CAB (TWC): Free Stock Analysis
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