Time Warner Cable Acquisition by Comcast to Cost $45.2 Billion

It was announced on Thursday that Comcast has agreed to purchase Time Warner Cable. The deal, which could merge two huge U.S. cable providers, is worth $45.2 billion. The deal, once approved will create the most dominant Internet connections and TV channels provider in the country. Analysts are saying that the merger will help Comcast in competing with streaming services such as Netflix, wireless phone providers and satellite TV providers. This means control of the multiple communications and entertainment services, including monitoring of home security, phone and broadband Internet. The deal is still waiting for federal government approval. The deal will effectively increase the price per share of Time Warner Cable to $158.82.

Target for the deal conclusion

The deal is expected to be concluded by December 2014 although the regulators in all likelihood, will look closely at its effect on consumers. On the part of Comcast, the company is willing to reduce about 10% of its subscribers or 3 million. There was an earlier offer from Charter, giving each share a value of $130. Time Warner Cable considered the offer too low and wanted $160. But the offer from Comcast puts an end to their negotiations.

Independent company

Time Warner Cable is an independent company that is no longer connected to the owner of Warner Bros.,. The announcement has raised several questions from the subscribers of each company and other consumers and HBO and CNN interested parties. It is undeniable that the merger will create one giant cable company, which will eat up competition.

No reason for worry (yet)

Comcast is the world’s largest communications and media company in terms of revenue and the largest provider of Internet and cable services in the United States. Since they are still waiting for federal government approval, subscribers do not have any reason to worry, if at all. However, there are groups that are focused on preventing mergers of big media companies. They believe that it drives prices up and kills competition from smaller companies and service providers, so it is expected that they will be lobbying for its disapproval.

Likely scenarios

There are fears that the prices of the services of Comcast will go up. Senior staff attorney John Bergmayer of Public Knowledge, an online consumer activist group predicts that cost for consumers will indeed go up, since Comcast can dictate the terms to related industries, including the distributors, communications networks, Internet companies and content creators, all of which has to interconnect with Comcast. Tech industry analyst Jeff Kagan thinks otherwise. He said that the prices would more than likely remain constant. He sees the merger as just two companies that want to increase their revenues and market share, which means it is more about the business side alone and has no direct effect on customers. For one thing, the price of cable subscription is already going up, following the pattern of doubling its price every 10 years.

There is still a long way to go with the merger. The most immediate scenario that people expect to happen is more bumps on customer service, when the two companies have to merge their customer base.

Photo credit: Taken by Comcast Inc under Creative Commons Attribution-Share Alike 3.0 Unported License.