Comcast scraps merger agreement with Time Warner Cable
25 April 2015
Comcast Corp said on Friday it was pulling out of its $45.2-billion merger agreement with Time Warner Cable. The move scraps a giant deal that faced opposition from consumers and a possible veto from federal regulators.
Comcast willl also call off a related transaction with Charter Communications.
"Today, we move on," Comcast CEO Brian Roberts said. "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."
Time Warner Cable said in a statement, the decision was "mutual." The agreement did not call for any breakup fee if the merger was not approved or the effort was abandoned on either side.
"We have always believed that Time Warner Cable is a one-of-a-kind asset," said TWC CEO Robert Marcus, in a statement. "We are strong and getting stronger. Throughout this process, we've been laser focused on executing our operating plan and investing in our plant, products and people to deliver great experiences to our customers."
According to commentators, the development could open the doors for other deals for Time Warner Cable, but it also underlined the regulatory risk on merger activity in the US cable industry, which is going through a period of rapid consolidation in the face of competition from satellite TV and web-based services.
Opposition to the deal had come from politicians, media company executives and consumer and industry groups, who had worried at the prospect it might create a monolith with too much control over what Americans did online and watched on TV. Comcast had countered that the merger would bring faster service and better video services to more US citizens.
Maxim Group analyst John Tinker said the pressure to consolidate in a very competitive industry was going to continue, Reuters reported.
Though Charter Communications Inc had bid unsuccessfully for Time Warner Cable last year, the group's controlling shareholder, Liberty Media Corp, had since indicated continuing interest.
"We believe that TWC will get a bid from Charter in the next three months, which we expect to be lower than the market expects," Needham analysts said in a note. They expect the opening bid at $130 to $135 per share.
Time Warner Cable shares were up 2.5 per cent at $152.52, on the day.
Comcast shares rose 0.15 per cent at $59.32 while Charter shares retreated 0.8 per cent at $182.18.'