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Reports US

US stock market daily report (February 13, 2014, Thursday)

February 14, 2014, Friday, 05:08 GMT | 01:08 EST | 10:38 IST | 13:08 SGT
Contributed by Millennium Traders

Comcast Corporation (CMCSA-Nasdaq) announced on Thursday, a deal to buy Time Warner Cable Inc. (TWC-NYSE) for $45.2 billion in stock. Per the proposed deal, Time Warner Cable shareholders would receive $158.82 a share in stock for their shares. The deal is expected to face serious scrutiny and a lengthy review process from U.S. antitrust regulators because the deal could potentially reshape pay TV and broadband markets across the country. As a result of the merger, Comcast would be given unprecedented leverage in negotiations with content providers and advertisers, as it would maintain a position in 19 of the 20 largest television markets across the USA.

Former FCC Chairman Reed Hundt said about the proposed merger, "I don't know if the deal is too big to fail to be approved but it is definitely too big to sail through either the Department of Justice or the FCC without serious, serious examination. Only Comcast could have paid this price and the combined company, if approved, would tilt the balance of power at every negotiating table in media and content and broadband and equipment industries."

Brian Roberts, Comcast Chief Executive reportedly commented that he is confident about getting the green light from regulators as the two companies plan to divest 3 million subscribers, so that their combined customer base of 30 million would represent just under 30% of the U.S. pay television video market. Roberts added that no decisions have been made, as to which markets to sell.

Roberts said, "Significantly, it will not reduce competition in any relevant market be because our companies do not overlap or compete with each other. In fact, we do not operate in any of the same zip code."

Neil Smit, president and CEO for Comcast would lead the new group. At the close of the merger expected at the end of 2014, Comcast said they will expand its buyback program by an additional $10 billion.

The argument from Comcast is that the acquisition would be beneficial to consumers in that it would roll-out more advanced cloud-based set-top boxes to Time Warner Cable customers. Higher broadband speeds would eventually be another positive factor, to the merger, per Comcast.