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Comcast to buy Time Warner Cable for $45 billion

Earns Time Warner Cable

LOS ANGELES (AP) - Comcast Corp. has agreed to buy Time Warner Cable Inc. for $45.2 billion in stock, or $158.82 per share, two people familiar with the matter said late Wednesday.

The deal will combine the nation'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.

The deal was approved by the boards of both companies and, pending regulatory approval, is expected to close by the end of the year, the people said.

The people spoke on condition of anonymity because the deal had not been announced formally. An announcement is set for Thursday morning, they said.

The price is about 17 percent above Time Warner Cable shares' Wednesday closing price of $135.31 and trumps a proposal by Charter Communications Inc. to buy Time Warner for about $132.50 per share, or $38 billion in cash and stock.

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, one of the people said.

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.

For a time, Comcast stayed in the background, waiting to purchase any chunk of subscribers that a combined Charter-Time Warner Cable would sell off. 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.

Instead, 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, a level believed not to trigger the concern of antitrust authorities. A formal cap was dissolved years ago by regulators, but divesting subscribers could help the deal get approved more quickly.

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, one of the people said.

Comcast also plans to add an additional $10 billion in share buybacks at the close of the deal, on top of a recent plan to boost its share buyback authority to $7.5 billion from $1 billion, the person said.

Conceding that it had lost the takeover battle, Charter issued a statement Wednesday saying, "Charter has always maintained that our greatest opportunity to create value for shareholders is by executing our current business plan, and that we will continue to be disciplined in this and any other (merger and acquisition) activity we pursue."

Even before the deal had been formally announced, it was being denounced. Public Knowledge, a Washington-based consumer rights group, said in a statement Wednesday that regulators must stop the deal, because it would give Comcast "unprecedented gatekeeper power in several important markets."

"An enlarged Comcast would be the bully in the schoolyard," it said.

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Linda February 14 2014 at 12:55 AM

Where does everyone think that 45 bil is going to come from? Your pocketbook.
Put the effort in NOW to call your Congressman/woman and Senator and vote NO on this merger. If you get lazy and don't do it you will have higher bills in the future, and be really mad. Now that's not healthy, is it? So get off your duff, look up the numbers on the internet for your zip code/ address and make the call. One more thing. A cable monopoly like this will have a extreme influence on political elections too, via advertising etc. Can't have it, just can't have it, people.

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Joe February 14 2014 at 9:11 AM

I have been contacting my congressman and women federal and state, the FCC, SEC, Dept. of Justice, Regulators, and CEO Brian Roberts of Comcast for 3 years about Comcast "RAPING" the public and getting away with it over and over and over. This is all because the cable lobbyists in Washington deregulated the cable industry now we are all screwed. Maybe it's time to break up Comcast into little pieces just like the federal government broke up AT&T. PLEASE HELP!!!

I'm am on a fixed income, in the last 6 years my cabel bill went from 45$ a month to 115$ a month for one basic TV cable connection and one internet connection.

In January 2013 Comcast bought NBC Universal Communications from General Electric for $16,700,000,000! February 13, 2013 Comcast said it offered AOL, Time/Warner $45,000,000,000! Comcast CEO Brian Roberts RAPED in a salary of $35,000,000 in 2013, $41,900,000 in 2012, and $26,900,000 in 2011 and is now a member of the exclusive BILLIONAIRS Club. This man makes more money in one week than I have made in 40 years of working hard. I want to know WHY this man deserves to make this kind of money in one year to make a yes or no decision on what company he is going to buy and/or sell, increase rates, how many people he is going to downsize, layoff, terminate, or fire. I can do this job for $100,000 per year and reduce cable rates for all customers, but GREED is number one in his world.

I want to know how to stop the Comcast billing Rape of the public? Why am I paying for the Comcast Theater in Hartford, Ct., Comcast Sports Network, and the NEW COMCAST TOWER being built in Philadelphia for $950,000,000, other promotional, sales, marketing, and advertising thru hidden fees? And other hidden fees which I cannot figure out and doesn’t say on my bill? I don’t want to be paying for Mergers and Acquisitions, their advertising on TV, and the internet or anything else. Why is there NO cable competition in Simsbury, Ct. I have called and researched, AT&T, Cox and others are NOT allowed to compete with Comcast, WHY? This is not fair or right. Where I live we are not allowed to have satellite dishes which are much less expensive per my landlord lease agreement.
Cable competition should be universal in all 48 lower states and I should be able to decide where my money goes even out of state. Why does Comcast have a monopoly on my cable in Simsbury, Ct.? This is a 500 billion dollar corporation that can survive without Raping the public every 2 months with rate increases.

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