Comcast to buy Time Warner Cable

[mr.MUskie]

money.cnn.com/2014/02/12/investing/comcast-time-warner-cable/

Comcast on Thursday will announce its intent to acquire Time Warner Cable in a $45 billion deal that will combine the two biggest cable companies in the United States.
Comcast (CCV) has agreed to pay $158.82 per share of Time Warner Cable (TWC, Fortune 500) stock, according to two people with direct knowledge of the transaction who insisted on anonymity because the deal will not be publicly announced until Thursday morning.
The two companies expect the merger to receive government approval and take effect by the end of the year, but regulators are likely to take a close look at the potential impact on consumers. Through the consolidation of Time Warner Cable, Comcast would be the dominant provider of television channels and Internet connections in roughly one in three American homes, a total unmatched by any other distributor.
The terms of the deal were first reported on Wednesday night by CNBC.
The impending deal ends months of jockeying for control of Time Warner Cable, which is the country's second biggest supplier of cable television service, with about 12 million subscribers in markets like New York City and Los Angeles. Charter (CHTR, Fortune 500), a smaller cable company, had been attempting a takeover of the company, but had been rebuffed by Time Warner Cable's board and chief executive.
In mid-January, when Charter indicated that it would offer about $130 per share, Time Warner Cable called the price "grossly inadequate" and countered with a suggestion of $160 per share, very close to what Comcast ultimately offered. Comcast had cast a shadow over the negotiations, and had reportedly held talks with Charter about how to potentially divvy up Time Warner Cable's territories.
By swallowing up Time Warner Cable on its own, Comcast will gain even more leverage over the country's marketplace for television, broadband Internet and phone services. Comcast already has about 23 million television subscribers in markets like Philadelphia, where it is headquartered.
With the addition of millions of Time Warner Cable subscribers, Comcast will have even more muscle in its negotiations with cable channel owners like The Walt Disney Company (DIS, Fortune 500) and Time Warner (TWC, Fortune 500), the parent company of this website. (Time Warner Cable was spun off from Time Warner in 2009 and no longer has any connection to the owner of CNN, HBO and Warner Bros.)
Although cable providers in general have poor reputations, Comcast has received some high marks for its next-generation software and set-top boxes.
Time Warner Cable, on the other hand, has what the American Customer Satisfaction Index called an "industry low" score last spring. It has shed television subscribers in recent months for a number of reasons, including a protracted blackout of CBS and Showtime in several million homes. Comcast could theoretically improve Time Warner Cable's performance by bringing in its own software.

[mu_hilltopper]

Hey, whatever will bring down my cable bill is good in my book.

This will certainly do that, right?

[Niv Berkowitz]

Wrong! They had an article on this in JS. It's going to drive prices up.

The key to cable/internet is to get you locked-in and then force price increases throughout. This is not good....rates will go up.

[Hards Alumni]

I'm pretty sure he was being facetious.

Prior to satellite TV, I'm not sure how cable TV wasn't considered a regional monopoly.

[mu_hilltopper]

I'm pretty sure he was being facetious.

Good guess.

[ChicosBailBonds]

Wrong! They had an article on this in JS. It's going to drive prices up.

The key to cable/internet is to get you locked-in and then force price increases throughout. This is not good....rates will go up.

Rates go up because of programming costs.   As I stated here the last few months, consolidation is coming...here's just the start of it.  In one way, it is an attempt to get programming costs under control.  A distributor with 30 million customers has a lot more clout in which to tell Disney, Fox, Viacom, CBS, etc to go pound sand.   This is why you will see more consolidation because scale is key.  Others will need to get bigger to have the same leverage over those that drive the costs...the content creators.

[Spotcheck Billy]

so when is DirecTV getting sold to DISH?

[ChicosBailBonds]

so when is DirecTV getting sold to DISH?

It would be the other way around.  I don't think the gov't will allow it, because that TRULY takes away competition, not like this TWC Comcast deal.  That being said, you never know.   

I think you will see Charter and someone merge.  Cablevision may merge.  Perhaps an AT&T and a satellite could merge because the competitive impact is much smaller, only a few million whereas a Dish and Directv merger would impact 15 million.

[jesmu84]

Rates go up because of programming costs.   As I stated here the last few months, consolidation is coming...here's just the start of it.  In one way, it is an attempt to get programming costs under control.  A distributor with 30 million customers has a lot more clout in which to tell Disney, Fox, Viacom, CBS, etc to go pound sand.   This is why you will see more consolidation because scale is key.  Others will need to get bigger to have the same leverage over those that drive the costs...the content creators.

Dumb question, maybe: instead of building up huge cable conglomerates that can have "clout" to tell the content companies what they're willing to pay.. why not just have lots of smaller companies all agree to tell the content companies to go pound sand?

[ChicosBailBonds]

Dumb question, maybe: instead of building up huge cable conglomerates that can have "clout" to tell the content companies what they're willing to pay.. why not just have lots of smaller companies all agree to tell the content companies to go pound sand?

Simplest answer....Collusion.  It's against the law.  Time Warner or Comcast or even a small cable company can't get together and say "let's team up against Disney and tell them to take a hike". It's against the law.

Plus, the content providers aren't dumb, they stagger their contracts so one ends with TWC in 2013, same deal for DIRECTV is 2014, the DISH deal in 2015, etc, etc.  That artificially protects them because of TWC tells Disney to pound sand in 2013, their customers that want ESPN no matter what, will leave TWC and go to the next guy.

The power is held by the content creators.  Plain and simple.  This is why Google, Apple, Intel, etc have all failed miserably to create a service that was going to "break the model".  Disney, Viacom, etc, etc. have no interest in doing that...in my opinion.  Great article today on how Apple has basically thrown in the towel (just as Intel did a few months ago) and Apple is now talking about partnering with cable \ satellite rather than trying to do deals with the content providers directly because they can't get it done.

[mu-rara]

Rates go up because of programming costs.   As I stated here the last few months, consolidation is coming...here's just the start of it.  In one way, it is an attempt to get programming costs under control.  A distributor with 30 million customers has a lot more clout in which to tell Disney, Fox, Viacom, CBS, etc to go pound sand.   This is why you will see more consolidation because scale is key.  Others will need to get bigger to have the same leverage over those that drive the costs...the content creators.

All of this will drive innovation to allow users the flexibility to pick and choose what they want.  I know that is not viable yet, but anytime you have close to oligopolies controlling a market, innovation takes over.  Look at Microsoft.  They got fat and happy owning the server and the desktop, and mobile computing and tablets are making them more irrelevant by the month.

[ChicosBailBonds]

All of this will drive innovation to allow users the flexibility to pick and choose what they want.  I know that is not viable yet, but anytime you have close to oligopolies controlling a market, innovation takes over.  Look at Microsoft.  They got fat and happy owning the server and the desktop, and mobile computing and tablets are making them more irrelevant by the month.

You still need the content to watch, right?  Don't get stuck on the delivery mechanism, it is the CONTENT that people want to watch, devices are becoming less relevant.  He who controls the CONTENT controls the PRICING controls the system.

Innovation has actually been fantastic the last 20 years, thanks to satellite mostly.  Cable was sitting on their butts for decades with no competition.  Then a better product came along, and suddenly they had to get their act together.  Now consumption on PCs, tablets, HD offers, 4K on the way, etc, etc.  All that innovation.....but at the end of the day you need a picture to watch on tablet, that smart phone, that PC, that 4K tv.  You're not staring at a black screen.  He who creates that picture content is in control.  Whether you get it via broadband, satellite, cable, fiber optics, they are going to get theirs one way or the other. 

Cable may not even exist in 10 years, satellite might be dead....but the programmers will be making their billions from whatever source you are consuming their product and you will pay in some fashion for that content.

[jesmu84]

Simplest answer....Collusion.  It's against the law.  Time Warner or Comcast or even a small cable company can't get together and say "let's team up against Disney and tell them to take a hike". It's against the law.

Plus, the content providers aren't dumb, they stagger their contracts so one ends with TWC in 2013, same deal for DIRECTV is 2014, the DISH deal in 2015, etc, etc.  That artificially protects them because of TWC tells Disney to pound sand in 2013, their customers that want ESPN no matter what, will leave TWC and go to the next guy.

The power is held by the content creators.  Plain and simple.  This is why Google, Apple, Intel, etc have all failed miserably to create a service that was going to "break the model".  Disney, Viacom, etc, etc. have no interest in doing that...in my opinion.  Great article today on how Apple has basically thrown in the towel (just as Intel did a few months ago) and Apple is now talking about partnering with cable \ satellite rather than trying to do deals with the content providers directly because they can't get it done.

I'm just guessing, but it probably helps that content creators hold a lot of sway over lawmakers. Gov't comes down on collusion quickly d/t pushes from the content companies. Meanwhile, cries of monopolies from consumers go unheard d/t distributors having more sway than consumers. Convenient little system.

Quite frankly, it's all sickening. And it's all a bad, bad joke.

[real chili 83]

It's too bad that there is not competition BETWEEN cable companies on a local level.  I would bet that prices would be more competitive if a household could get bids from both TW and Comcast.  Similar to how phone companies can compete for business with individual households.

I understand that satellite competes with cable.  Trouble is, many households cant get satellite....apartments, Sr. living complexes, etc.

[ChicosBailBonds]

It's too bad that there is not competition BETWEEN cable companies on a local level.  I would bet that prices would be more competitive if a household could get bids from both TW and Comcast.  Similar to how phone companies can compete for business with individual households.

I understand that satellite competes with cable.  Trouble is, many households cant get satellite....apartments, Sr. living complexes, etc.

About 90% of people in this country can get satellite.

As explained above, there is a reason why cable is a monopoly in a territory.  Buildout costs are massive.

[ChicosBailBonds]

I'm just guessing, but it probably helps that content creators hold a lot of sway over lawmakers. Gov't comes down on collusion quickly d/t pushes from the content companies. Meanwhile, cries of monopolies from consumers go unheard d/t distributors having more sway than consumers. Convenient little system.

Quite frankly, it's all sickening. And it's all a bad, bad joke.

You can say that about lawmakers in many regards.  We have lawmakers punishing tobacco companies because they cause health issues for Americans, yet lawmakers (same ones sometimes) pushing legalization of marijuana which causes MORE lung damage than cigarette smoking.  One of just 1000's of examples. 

Our gov't has been bought and paid for many centuries. 

[Lennys Tap]

You can say that about lawmakers in many regards.  We have lawmakers punishing tobacco companies because they cause health issues for Americans, yet lawmakers (same ones sometimes) pushing legalization of marijuana which causes MORE lung damage than cigarette smoking.  One of just 1000's of examples. 

Our gov't has been bought and paid for many centuries. 

When I was a smoker I smoked about a pack and a half a day. That's 210 cigarettes a week, and I knew lots of people who smoked much more than I did. If you're saying smoking 210 joints a week is worse for you than smoking 210 cigarettes I wouldn't be surprised - but of course no one could smoke that much marijuana. What ratio are you using in your assertion that it causes MORE lung damage?

[ChicosBailBonds]

When I was a smoker I smoked about a pack and a half a day. That's 210 cigarettes a week, and I knew lots of people who smoked much more than I did. If you're saying smoking 210 joints a week is worse for you than smoking 210 cigarettes I wouldn't be surprised - but of course no one could smoke that much marijuana. What ratio are you using in your assertion that it causes MORE lung damage?

All depends what study you want to use.  The pro-pot people will point to studies that say damage is less than smoking.  Other studies show something different.  It contains about 20X more ammoniam 5X more hydro cyanide and nitrogen oxide (lung damage concern) than tobacco smoke. 

Of course, we don't have decades of pot smokers of data so a lot of this won't be known for a long time.  In the meantime, the Pols will go for the money grab....as they always do.  I just find the irony in their push to end one product to smoke due to "public health benefit" and yet no qualms over another one that has plenty of public health issues...to the brain, lungs, etc.   

[brandx]

You still need the content to watch, right?  Don't get stuck on the delivery mechanism, it is the CONTENT that people want to watch, devices are becoming less relevant.  He who controls the CONTENT controls the PRICING controls the system.

Innovation has actually been fantastic the last 20 years, thanks to satellite mostly.  Cable was sitting on their butts for decades with no competition.  Then a better product came along, and suddenly they had to get their act together.  Now consumption on PCs, tablets, HD offers, 4K on the way, etc, etc.  All that innovation.....but at the end of the day you need a picture to watch on tablet, that smart phone, that PC, that 4K tv.  You're not staring at a black screen.  He who creates that picture content is in control.  Whether you get it via broadband, satellite, cable, fiber optics, they are going to get theirs one way or the other. 

Cable may not even exist in 10 years, satellite might be dead....but the programmers will be making their billions from whatever source you are consuming their product and you will pay in some fashion for that content.

I think this is the point where we totally agree.

But, most people will pay for quality content - whether it be sports, movies, series, etc. But what people complaint about is that they are forced to pay for terrible content to get the content that they want. This is what will go to the wayside in the coming years.

If I open a crappy restaurant, the people going to a quality place should not have to pay a surcharge to keep my place open. And that is what we do with cable. Nobody should have to pay extra for channels that can't support themselves.

[Lennys Tap]

All depends what study you want to use.  The pro-pot people will point to studies that say damage is less than smoking.  Other studies show something different.  It contains about 20X more ammoniam 5X more hydro cyanide and nitrogen oxide (lung damage concern) than tobacco smoke. 

Of course, we don't have decades of pot smokers of data so a lot of this won't be known for a long time.  In the meantime, the Pols will go for the money grab....as they always do.  I just find the irony in their push to end one product to smoke due to "public health benefit" and yet no qualms over another one that has plenty of public health issues...to the brain, lungs, etc.   

I did a simple Google search and nothing I could find suggested as much lung damage from pot let alone more. Studies even suggest that moderate pot smoking can increase lung function. Could you please link a study that cites marijuana as being more harmful to a person's lungs than cigarettes? Thanks.

[ChicosBailBonds]

I did a simple Google search and nothing I could find suggested as much lung damage from pot let alone more. Studies even suggest that moderate pot smoking can increase lung function. Could you please link a study that cites marijuana as being more harmful to a person's lungs than cigarettes? Thanks.

I'm happy to help...apparently I'm using a more advanced Google search.   


Try

American Lung Association  http://www.lung.org/stop-smoking/about-smoking/health-effects/marijuana-smoke.html

http://www.swedish.org/about/blog/february-2013/marijuana-smoking-and-the-risk-of-lung-cancer
Drug Free America

New England Journal of Medicine

CDC

Etc

[Lennys Tap]

I'm happy to help...apparently I'm using a more advanced Google search.   


Try

American Lung Association  http://www.lung.org/stop-smoking/about-smoking/health-effects/marijuana-smoke.html

http://www.swedish.org/about/blog/february-2013/marijuana-smoking-and-the-risk-of-lung-cancer
Drug Free America

New England Journal of Medicine

CDC

Etc

So one study you cite says more "bad stuff" per joint/cigarette, but heavy marijuana smokers ingest 2 or 3 joints a day as compared to cigarette smokers ingesting 20 or 30. The other study says we don't know, nothing conclusive that marijuana causes any damage. Suggesting that marijuana smoking has been proven to be more dangerous to lung health than cigarettes is just wrong.

[Coleman]

Not even sure how Chicos turned this into a tobacco/marijuana thread, but the assertion that marijuana causes more lung damage than tobacco per amount smoked is insane. I'm not saying marijuana is good for you, but cigarettes are probably the most unhealthy thing you can do to your body, short of shooting up heroin with used needles you found in a parking lot.

Not to mention there are lots of ways to use marijuana. Putting it in brownies causes no lung damage. Chewing/dipping tobacco still causes cancer of the mouth, gums and throat.

[ChicosBailBonds]

I think this is the point where we totally agree.

But, most people will pay for quality content - whether it be sports, movies, series, etc. But what people complaint about is that they are forced to pay for terrible content to get the content that they want. This is what will go to the wayside in the coming years.

If I open a crappy restaurant, the people going to a quality place should not have to pay a surcharge to keep my place open. And that is what we do with cable. Nobody should have to pay extra for channels that can't support themselves.

That may be the case, but what it means is you will pay A LOT more for that quality content, much more on a per unit basis than you pay today.  You can't compare it to another industry because the product isn't made like a salad, a hamburger, a screwdriver, etc.

[brandx]

That may be the case, but what it means is you will pay A LOT more for that quality content, much more on a per unit basis than you pay today.  You can't compare it to another industry because the product isn't made like a salad, a hamburger, a screwdriver, etc.

Which would save me a ton of money cuz the only thing I'd be paying for are certain sports channels.

but Ariel may change the landscape on this too.