Comcast Corp.’s agreement to acquire Time Warner Cable Inc. for $45.2 billion in stock came as a surprise deal putting together the two largest U.S. cable companies and creating a bulwark against competition from phone and satellite providers.
Time Warner Cable investors will receive 2.875 shares of Comcast stock for each of their TWC shares, the companies said Thursday.
The purchase values each Time Warner Cable share at $158.82, or 17 percent more than its closing price Wednesday. The transaction, subject to approval by stockholders and regulators, is expected to be completed by the end of 2014.
Comcast Chief Executive Officer Brian Roberts trumped a bid from Charter Communications Inc. and its billionaire backer John Malone, who had courted Time Warner Cable for months.
The merger is designed to help the companies cope with an industrywide decline in cable-TV viewers after years of inroads by phone and satellite companies, as well as newer Internet services such as Hulu LLC and Aereo Inc.
“This leaves Comcast as the sole king of the cable hill, with John Malone and Charter hitting a brick wall in their hopes of becoming a close No. 2,” said Richard Greenfield, an analyst with the firm BTIG. “This is a game changer for Comcast.”
Time Warner Cable shareholders will own about 23 percent of Comcast’s common stock after the transaction is completed. The deal, which doesn’t carry a breakup fee for either side, will generate savings of about $1.5 billion. Comcast, based in Philadelphia, also announced plans to buy back an additional $10 billion of its shares.
Charter is unlikely to match Comcast’s bid.
Time Warner Cable’s third-largest unit is based in Akron and serves customers in Northeast Ohio and Western Pennsylvania. It has 567 employees in Summit County.
Time Warner Cable spokesman Mike Hogan said it was too early to comment on any impact to local customers or employees. “There will be very little impact on the vast majority of employees. Comcast will need talented, motivated employees to operate the cable systems.”
Assuming the merger goes through and the new company is called Comcast, local cable subscribers will no longer see a name that has been familiar to them for more than 40 years.
It was in June 1973 that the former Akron CableVision became Warner Cable, trumpeting the name change with a full-page newspaper ad promising “a brighter tomorrow.”
That may have sounded inviting to viewers whose choices consisted of the eight TV stations in Akron, Canton and Cleveland which comprised the Beacon Journal’s TV listings at the time. But cable was still a fledgling in the region.
The city of Akron had awarded its first cable franchise to Telerama Inc. in 1965. But telecasts by what was then known as Akron CableVision did not begin until about five years later. A change in ownership later made it part of the Warner Bros. entertainment empire, and prompted the name change.
Comcast plans to divest about 3 million subscribers of the combined company to keep its market share below 30 percent. It’s reportedly willing to sell those customers to Charter.
Beacon Journal staff writers Rich Heldenfels and Betty Lin-Fisher contributed to this report.