The country’s two largest cable providers Comcast and Time Warner Cable announced today their merger into one enormous cable company. While subject to the approval of shareholders and regulators, the deal could bring big changes, both positive and negative, to the services provided to current Comcast and Time Warner subscribers.
The new cable company, led by Comcast President and CEO Neil Smit, will combine Time Warner and Comcast’s existing services, including Comcast’s cloud-based X1 Entertainment Operating System, 50,000 video on demand television choices, 300,000+ streaming choices on XfinityTV.com and the Xfinity TV live streaming mobile apps along with Time Warner’s StartOver and LookBack services, which allow customers to restart live programs and watch programs up to three days after they air live, respectively. The merger will also give Comcast access to key geographic areas like New York, Southern California, Texas, North and South Carolinas, Ohio and Wisconsin.
Comcast and Time Warner tout the merger as a way to bring advanced services to market faster. “Comcast and Time Warner Cable have been the leaders in all of the industry’s most important innovations of the last 25 years and this merger will accelerate the pace of that innovation,” said Robert D. Marcus, chairman and CEO of Time Warner Cable. Such innovations will include high-performance point-to-point and multi-point Ethernet services and cloud-based managed services to enterprises.
Comcast will net approximately 8 million managed subscribers through the merger, bringing its total number of managed subscribers to approximately 30 million. This will amount to less than 30% of the total number of pay-TV subscribers in the U.S, according to Comcast.
The deal brings all 284.9 million of Time Warner Cable’s shares outstanding in exchange for approximately $45.2 billion worth of Comcast shares, valuing Time Warner Cable stock at approximately $158.82 per share. According to Comcast, the transaction will generate approximately $1.5 billion in operating efficiencies.
Though the merger is still waiting on shareholder approval at both companies along with regulatory review, if all goes well Comcast expects the deal to close by the end of the year. There is no word yet on changes in subscription pricing or how Time Warner customers would transition to Comcast, though one would expect that with less competition, prices would rise. It might also become more difficult for smaller tech companies like Netflix and fledgling entertainment startups to strike deals with the new behemoth. And, if new legislation doesn’t come through to protect net neutrality, this deal would make it even harder for smaller media companies to negotiate with Comcast for fast-tracked bandwidth.