Comcast agreed to buy Time Warner Cable for $45 billion Wednesday night, swooping in to top a bid by Charter Communications to merge the nations's top two cable companies in the biggest media deal of the year, according to a person familiar with the matter.
The all-stock deal is valued at about $45 billion, representing an 18% premium from TWC's market capitalization based on its Wednesday closing price of $135.31.
NY Senator Chuck Schumer says he has been in talks with Comcast and he says Comcast is committed to honoring previous commitments to jobs in WNY.
"In light of the news of this potential merger, my biggest priority is ensuring that Comcast preserves Time Warner Cable jobs in Buffalo and all of New York. After speaking with Mr. Cohen, a top Comcast executive, I am very pleased with the news that Comcast is fully committed to following-through on previous commitments to jobs, particularly the job additions coming to Buffalo at Compass East," said Schumer. "I urged Mr. Cohen to maintain the entire TWC workforce in New York and consider adding to their presence – and while there was no guarantee – my expectation is that Comcast will invest in New York – as they did after the merger with NBC – and the results of the merger will be positive for New York."
State Senator Tim Kennedy said, "We worked hard to get Time Warner to build their new call center in Buffalo and hire 150 Western New Yorkers to work out the new Compass East development. Comcast's commitment to preserve all of Time Warner Cable's jobs in Western New York is tremendous news for our region and its employees. With our strong workforce and affordable cost of living, Buffalo is an ideal place to do business. Time Warner recognized those benefits, and now it's clear Comcast does too."
Buffalo Common Council President Darius Pridgen has some concerns about the entry of Comcast into the city where Time Warner has been the sole cable provider. "Right now you know the city of Buffalo has only one cable provider and they can raise rates really whenever..they've shown us that they can. Or take away equipment. Charge rental fees. Sso we're already suffering with the cable company that we have as far as no control. Now imagine a larger company that really has a more global focus and worrying about will they pay attention to a market like Buffalo. Will rates go up?" Pridgen says he will press for a council resolution calling on local members of Congress to protect Buffalo residents by pressuring Comcast to live up to its pledges and agreements.
TWC's shares have been rising as Comcast and Charter, backed by John Malone-led Liberty Media, have been jostling for months to acquire TWC and its 15 million customers who subscribe to Internet, cable TV and phone services.
The deal will face intense scrutiny from anti-trust regulators, who will have to wade through the issues of competitive pressures and effects on pricing stemming from merging two cable giants.
But the cable industry could be entering a period of consolidation as it faces pressures from multiple directions and struggling companies may need a white knight to sustain their business. As evidenced by TWC's costly fight with CBS Corp. last year over retransmission fees, TV station owners are demanding higher fees for the right to broadcast their signal. Cable networks are demanding higher affiliate fees for their shows, as cost of programming, particularly for sports events, rises. And consumers are increasingly ditching their expensive cable bills for online streaming options.
The number of TWC consumers fell by 85,000 to 14.4 million in the fourth quarter, partly due to its dispute with CBS.
With Charter and Comcast's competition for TWC's assets so stiff, there had been reports late last year that the two company may jointly bid for a deal.
Malone, a cable industry legend and chairman of Liberty Media, has been advocating an industry consolidation. With Liberty Media's large stake in Charter, Malone's desire to facilitate a deal for Charter to buy TWC has been widely known.
Despite the struggles in the video and phone business, consumer demand for faster Internet continues to grow and the industry will devote more resources to enhancing their networks. Such initiatives will require heavy investments, which Comcast could certainly bring to the table.
Comcast owns a little over 20% of the market. And a combined Comcast-TWC would account for 33% of the pay-TV subscribers in the U.S., notes Craig Moffett, an industry analyst at Moffett Nathanson Research. "A company of that size would arguably have de facto control of what content could and couldn't exist in the U.S.," he wrote in a report last year. "A programmer that failed to get a distribution deal with Comcast arguably wouldn't be economically viable."