Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Comcast walks away from Time Warner Cable merger

The cancellation of the deal has raised questions about Comcast’s future direction but, perhaps, left Time Warner as an appetizing target. Charter Communications had pursued the company before Comcast and may resume its courtship to become the second largest cable company.
Comcast walks away from Time Warner Cable merger

Comcast (NASDAQ:CMCSA) has ditched its US$45 billion friendly takeover for Time Warner Cable (NYSE:TWX) amid intense regulatory scrutiny from antitrust authorities.

Comcast was keen to see the deal completed because it would have reached millions of new subscribers in the US’s largest metropolitan areas like New York and Los Angeles.

The cancellation of the deal has raised questions about Comcast’s future direction but, perhaps, left Time Warner as an appetizing target. Charter Communications had pursued the company before Comcast and may resume its courtship to become the second largest cable company.

"Today, we move on….Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn't agree, we could walk away," said Comcast’s CEO Brian Roberts.

The bid, first announced with grand pomp over a year ago, had surprised most observers, who wondered how the two US cable television market leaders would manage to obtain clearance for the deal from the antitrust authorities.

On Wednesday, Comcast and Time Warner Cable managers met members of the Federal Communications Commission (FCC) and the Department of Justice, whose approval was necessary for the takeover to go through.

"This is a victory not only for the Department of Justice, but also for content providers and streaming services which work to provide innovative products to consumers throughout America and the world, "said the US Attorney General, Eric Holder.

The authorities expressed concern about the impact the merger would have on consumers, said sources familiar with the discussion told Reuters, given that the combined company would have had unrivaled market share, controlling some 30% of all TV and 55% of all broadband subscribers in the United States.

FCC investigators were said to be considering recommending the merger case to be reviewed by an administrative law judge, the sources said. But such an approach was interpreted as de-facto obstacle block the merger.

The companies have presented the deal as a straightforward cable merger that doesn’t reduce consumer choice since cable operators don’t overlap geographically, but the increased market share in broadband Internet has been under more intense scrutiny, WSJ added, quoting people familiar with the reviews.

On Wall Street, the action Comcast was trading down 0.41% to 58.99 dollars and Time Warner was trading up 0.18% to US$85.07 this morning.

Companies that are trying to merge routinely agree to concessions to win government approval. Comcast did that back in 2011 before it acquired NBC Universal.

Time Warner Cable was a unit of Time Warner until 2009. The two companies are no longer related except by name.

 

 

 

View full CMCSA profile View Profile

Comcast Timeline

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use