Slashdot Mirror
Charter Strikes $56B Deal For Time Warner Cable
mpicpp writes with word that Charter Communications has struck a $56 billion deal to buy Time Warner Cable; if the deal goes through (which the article says is likely, according to Macquarie Research analyst Amy Yong -- at least more likely than the recently scotched Comcast-Time Warner deal), it would mean that the second- and third-largest U.S. cable companies would share a letterhead, and more than 20 percent of the country's ISP market.
From the linked Reuters article: The Federal Communications Commission immediately served notice that it would closely scrutinize the deal, focusing not only on absence of harm but benefits to the public. Charter, in which Malone-chaired Liberty Broadband Corp owns about 26 percent, is offering about $195.71 in cash-and-stock for each Time Warner Cable share, based on Charter's closing price on May 20. Including debt, the deal values Time Warner Cable at $78.7 billion. A key area of regulatory concern would be competition in broadband Internet.
This is part merger, part purchase.
"Time Warner Cable shareholders can choose $100 a share in cash and about $95 in Charter stock, or $115 in cash and the remainder in stock."
So, the TWC shareholders can choose from one of two real cash options which include retaining shares in the new Charter/TWC combined company. Since stock is just equity, and is "funny money" until it's sold, I don't know how it makes any difference between holding TWC stock before the merger or Charter/TWC combined after the merger stock so long as the stock price is valued properly. They're both large cable/internet/phone companies with similar assets and valuations based on those assets -- unlike the dotcom companies that no one knew how to put a dollar value on because they were so new and had such high growth potential until the bubble burst.
TWC was trading for just below $160 for over a year before the merger talks. Now, it's at $178. The merger offer puts a premium on it at $195 in cash and stock combined. Both Charter and TWC stocks are trading higher on news of the merger, so it complicates finding the value/number of shares TWC shareholders will get of the combined company when the deal goes through unless that's already pegged in the deal.
Looks like a TWC shareholder should be very happy taking $100 to $115 per share in cash for their pre-merger stock that was $160/share recently... in addition to stock in the combined company. There may be tax advantages to taking stock over cash to avoid capital gains.
I don't see how this would hurt shareholders - they get the benefits of combining brand names, services, call centers, media contracts, marketing, etc. There will be lots of benefits, thus the stock price surge. Customers... well, customers will get the shaft as always, but that's no different than any other day in a world of local cable monopolies.
The problem is that nobody really wants to tackle the FIOS rollout that would be needed to make this work. However, I do believe it would work, and a small municipality, one that is geographically isolated, would be a great case study in how it would work.
Hello, I'm in Chattanooga, TN. Our electric utility has run fiber on its existing power poles.
They haven't expressly set it up to have independent ISPs, but the fiber? Done. The other part? Would be at the head-end and maybe the ONTs, it would be easy to arrange.
Of course, in large part, it was actually done by a private contractor, Adelphia, I believe, but I've not seen their trucks in a good while, so I don't know for sure, I may be misrecalling the name. A-something anyway.
As a Time Warner subscriber, this is definitely a good thing.
Their equipment is trash - I no longer use their DVR or their cable modem because they are both fucking garbage. I built a media PC with an HD tuner / cable card set up that has already paid for itself by not having to "rent" their shit DVR box that I would have to reboot 2 or 3 times a week, at a 10-minute boot up time. I dumped their garbage "rented" cable modem because I'd have to power cycle it once a week or so, and replaced it with a $60 unit from Amazon that also actually increased throughput speed. That change will pay for itself in about 7 months.
They abuse DRM flagging on everything that isn't available with an over-the-air tuner. If you have to go to one of their offices to trade in equipment, or get replacement, schedule two hours because they only ever have one or two people at the counter, and there's a line of people waiting to trade in broken shit for stuff that isn't broken yet, but will be. They charge more for the same services from other cable providers, because they can - when you don't have any competition for high speed internet, you don't have to worry about other lines of business being threatened (satellite TV).
Fuck Time Warner. I hope this merger goes through and Charter fires the TWC management and starts cleaning up the huge mess they've left behind.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.