Comcast is shelling out $45.2 billion to acquire Time Warner Cable in a stock-for-stock transaction. The goal of the merger is to create a leading technology and innovation company that competes on its ability to deliver cutting-edge products while tapping a national platform to drive operational efficiencies and economies of scale.
Through the merger, Comcast will acquire about 11 million Time Warner Cable's subscribers. After divesting systems that serve about 3 million subscribers to reduce competitive concerns, Comcast will net about 8 million new subscribers. That brings the company’s total to about 30 million.
“Rob Marcus and his team have created a pure-play cable company that, combined with Comcast, has the foundation for future growth,” said Brian L. Roberts, chairman and CEO of Comcast Corp. “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 experience within the highly competitive and dynamic marketplace in which we operate."
How Does This Benefit You?
Comcast said the combined company will generate multiple pro-consumer and pro-competitive benefits, including faster deployment of existing and new products and services. Comcast's subscribers today have access to the cloud-based X1 Entertainment Operating System, plus 50,000 video on demand choices on television, more than 300,000 streaming choices on XfinityTV.com, Xfinity TV mobile apps that offer 35 live streaming channels plus the ability to download to watch offline later, and the just-launched X1 cloud DVR.
Time Warner Cable owns cable systems located in key geographic areas, such as New York City, Southern California, Texas, the Carolinas, Ohio, and Wisconsin. Time Warner will combine its products and services with Comcast's, including StartOver, which allows customers to restart a live program in progress to the beginning, and LookBack, which allows customers to watch programs up to three days after they air live, all without a DVR.
The companies said the merger would offer technological benefits, including a better video experience, higher broadband speeds, and faster in-home Wi-Fi. Meanwhile, American businesses will reportedly benefit from a broader platform, and the company will be better able to offer advanced services like high-performance point-to-point and multi-point Ethernet services and cloud-based managed services to enterprises.
Doomed to Fail?
We caught up with Jeff Kagan, an independent technology analyst, to get his take on the merger. He told us this is a huge deal in the world of cable television.
“Cable TV has been going through a tough period losing customers to new competitors. This deal would have to win regulatory approval. That may not be easy, but is do-able,” Kagan said. “Comcast does not compete with Time Warner Cable, so that is in their favor. It would just be a matter of selling off part of their customer base.”
Ken Auletta, a columnist for The New Yorker, said the deal allows Comcast to offer the most advanced video-on-demand service, giving its customers an array of program choices, while denying them the ability to skip commercials.
“The problem is that making consumers watch commercials -- or charging them a monthly fee to avoid ads -- is an exercise of power that is doomed to fail,” he wrote in a column. “A generation has grown accustomed to watching ad-free Netflix and HBO, and to recording programs on cable boxes. Already, two-thirds of those who use TiVo to record shows skip the ads.”
If government regulators approve, Comcast said the deal could close by the end of 2014.