As widely speculated late Wednesday night, Comcast and Time Warner Cable's boards announced on Thursday that the two companies were merging in a deal reportedly worth more than $45 billion in stock. Indeed, the #1 and #2 cable providers in the country, respectively, are joining forces to form a single, massive conglomerate that would ostensibly wield considerable influence.
Per the terms of the deal, Comcast will acquire 100% of TWC's 284.9 million shares outstanding. Comcast, which already owns NBCUniversal, is said to plan on shedding 3 million subscribers to keep ownership of the entire cable marketplace below 30%, reports the Washington Post, in an effort to "head off regulatory concerns."
Such a move is widely seen as an effort to stymie rising infrastructure costs and declining subscriber numbers. As BuzzFeed business editor Peter Lauria explains, a merger would allow Comcast and TWC to more effectively "cluster" together to form "geographically contiguous systems" throughout the Eastern United States. Closer systems allow a single super-provider to more efficiently roll out and/or upgrade new services, thanks to consolidated infrastructure.
All of which is contingent on whether or not such a deal is even approved. Anti-trust regulators from the Justice Department and the Federal Communications Commission will no doubt be zeroing in on whether or not the deal is in consumers' best interest. For what it's worth, the proposed deal is already sparking fierce opposition from consumer advocacy groups.
"No one woke up this morning wishing their cable company was bigger or had more control over what they could watch or download," said Craig Aaron, CEO of Free Press, a consumer advocacy group, in a statement. "Americans already hate dealing with the cable guy--and both these giant companies regularly rank among the worst of the worst in consumer surveys. But this deal would be the cable guy on steroids--pumped up, unstoppable and grasping for your wallet."
[Image: Flickr user Matthias Weinberger]