Comcast Corp. agreed to buy Time Warner Cable for about $45.2
billion in stock, in a deal that would combine the nation's two
biggest cable operators.
The boards of both companies have approved the transaction,
which was announced Thursday morning.
By negotiating the deal, Comcast Chief Executive Brian Roberts
ensures his dominance of the U.S. cable industry will be
maintained. But the transaction is expected to face a lengthy
regulatory review.
Comcast and Time Warner Cable executives are hosting a
conference call with investors at 8:30 a.m. Eastern Time to discuss
the deal. Stay tuned to MoneyBeat for the live play-by-play of the
call.
8:29 am | by Steven Russolillo
We're two minutes away from the beginning of the call. Time
Warner Cable shares are spiking premarket, up to $149.73 from
Wednesday's close of $135.31. Comcast is down a little. Stay tuned
for the call.
8:33 am | No Breakup Fee? What? | by Maureen Farrell
Time Warner Cable's CEO told CNBCThursday morning that the deal
does not contain a breakup fee?
That's surprising in most deals but particularly one with this
many potential regulatory potholes.
At first blush because ofthe high price tag,this deal look like
a huge win for Time Warner Cable, and should it pass regulatory
muster, it still should be.
But as Andrew Ross Sorkin noted on CNBC Thursday after asking
that question of Rob Marcus without a breakup fee, Comcast in many
ways has the "option" to buy Time Warner Cable.
Look for more on this on the call.
8:34 am | by Steven Russolillo
Comcast CEO Brian Roberts jumps on the call, decribing this as a
"very exciting day" for the company. He said he had been evaluating
this deal "for some time now."
8:36 am | by Sarah Krouse
Mr. Roberts calls the deal "pro-consumer, pro-competitive and
strongly in the public interest." He adds that the two companies do
not operate in any of the same zip codes.
8:37 am | Competition | by Steven Russolillo
Mr. Roberts comments on regulatory issues, saying this
transaction is "approvable." It says it is "pro consumer, pro
competitive and strongly in the public interest." He said the deal
will benefit millions of customers through technological
advancements and innovative products.
He also said it won't reduce competition in any relevant market,
as both Comcast and Time Warner Cable don't compete in any of the
same markets.
8:41 am | by Steven Russolillo
Mr Roberts said the two companies have operating efficiencies of
$1.5 billion, meaning COmcast is paying 6.7 times EBITDA for a
cable company that operates in premier markets "which we are very
bullish."
8:43 am | by Steven Russolillo
Time Warner Cable CEO Rob Marcus notes it's always difficult to
cede control. That said, this deal "just makes too much sense."
8:43 am | by Steven Russolillo
Time Warner Cable says it will suspend its buyback, but will
keep paying a dividend.
8:44 am | by Sarah Krouse
Time Warner Cable chief executive Rob Marcus said as difficult
as it is to cede control of a business, "in this case it just makes
too much sense". He added that the deal feels natural to him.
"Much as I would have relished the opportunity to let my team
seize the opportunity ahead, I believe that my customers and yours
stand to benefit tremendously," he said.
8:49 am | by Steven Russolillo
Comcast CFO Michael Angelakis says the company will expand its
existing stock buyback plan by an additional $10 billion upon
closing of the deal.
8:50 am | by Steven Russolillo
On to the regulatory discussion. Comcast Executive Vice
President David Cohen reiterates that the deal is "pro consumer,
pro competitive, strongly in the public interest and
approvable."
8:52 am | by Steven Russolillo
Any legitimate concerns are addressed by the highly competitive
market, Mr. Cohen said. "This is simply not a horizontal merger."
He points out that Comcast and Time Warner Cable don't compete in a
single zip code in America.
8:53 am | by Sarah Krouse
Cohen says the deal will create a "much more effective
competitor in the advertising market" and lead to greater broadband
competition and adoption.
8:53 am | by Steven Russolillo
With divestitures, Comcast will own or manage less than 30% of
the cable market. That's about the same share as post AT&T and
Adelphia transactions, which Mr. Cohen notes took place in "a much
more competitive market." The proposed transaction won't reduce
competition in any relevant market, he added.
8:57 am | by Steven Russollillo
"The opportunity to now have a much broader footprint, even
though we only have 29% of the customer base, gives us room for
growth," said Mr. Roberts, responding to the first question which
came from Morgan Stanley.
8:58 am
"We're bullish on cable," Mr. Roberts said. "We've had success
integrating in the past." He says he has the team in place to put
the company together and for it to be "very, very special."
9:00 am | by Sarah Krouse
Time Warner Cable chief Rob Marcus calls the combination "a
truly special one."
"The fact that Time Warner Cable shareholders can participate in
23% plus of the new company is a fabulous opportunity," he
said.
9:01 am | by Steven Russolillo
Time Warner Cable's Mr. Marcus was asked about the fact that
this deal was an all-stock deal, whereas other proposals from
Charter were a mix of cash and stock. He wouldn't get into details
on the merits of the offers, describing them as "apples and
oranges." On the deal struck, "this combination is a truly special
one," he said.
9:10 am | by Sarah Krouse
On a question about the potential regulatory scrutiny of the
deal, Mr. Roberts says, "I think all deals get real scrutiny.
There's a very thorough process and that's what we would expect
here.W e want to cooperate and be as expeditious as possible, but
understand that there's a process."
The company said nine to 12 months was a "very realistic time
frame" for regulatory review.
9:10 am | by Steven Russolillo
Comcast CEO Brian Roberts was asked about future buybacks.
"Let's cross that bridge when we get to it," he said.
He pointed out Comcast previously expected to purchase $3
billion of stock this year, which is part of an existing $7.5
billion authorization plan. Expanding the buyback by about $10
billion will mean the company will have about $15 billion of
buuyback authorizations left when the deal closes.
9:12 am | Competition | by Steven Russolillo
Lots of questions about competition and regulatory scrutiny.
"It may sound scary," said David Cohen, executive vice president
at Comcast. But when you parse the deal and realize that the
combined company will have control of about 30% of the market, it
looks more appealing from a regulatory standpoint, he added.
"I actually think it's going to get a careful review, but it's
not going to have a more stringent review than prior transactions
this company has done," he said.
9:16 am | Comcast: This Won't Change Our Credit Ratings | by
Maureen Farrell
Comcast's executives are insistent that this $45 billion deal
won't change the company's credit rating. They said they have
already spoken to ratings agencies, and they've given them
confidence that the combined Comcast-Time Warner won't change the
rating.
They expect leverage post deal to be around 2.2X to 2.3X
9:18 am | Divestitures | by Steven Russolillo
"We've made no decisions about that at all," Comcast CEO Brian
Roberts said about divestitures.
9:22 am | That's a Wrap | by Steven Russolillo
The conference call concludes with Mr. Roberts touting yet again
the incredible opportunities that the deal will present for the new
company and the cable industry as a whole.
A quick check of each company's stock price minutes before the
opening bell: Comcast class A shares are down 2.4% at $53.90 in
premarket trading. Time Warner Cable shares are up 8% at $146.20
premarket. That's well below the $158.82 Time Warner Cable
shareholders will receive in stock for their shares.
Stay tuned to MoneyBeat and wsj.com all day for continued news,
analysis and developments about this deal.
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