Comcast to Buy Time Warner Cable in All-Stock Deal: Reports

Comcast chairman and CEO Brian Roberts could be Time Warner Cable’s white knight after all, with reports claiming the nation’s largest cable operator is set to announce a deal Thursday morning that would join the two largest cable operators in the nation in a deal worth $159 per share, or about $45.2 billion, not including debt.

The Comcast deal would create a 33-million subscriber powerhouse with operations in most of the major cities in the country. According to CNBC reporter David Faber, who broke the story late Wednesday night, Comcast has indicated a willingness to shed 3 million subscribers from the combined.

Time Warner Cable declined comment. Comcast could not be reached for comment late on Wednesday night.

In a statement, Charter said it will focus on operations and possibly other deals.

“Charter has always maintained that our greatest opportunity to create value for our shareholders is by executing our current business plan, and that we will continue to be disciplined in this and any other M & A activity we pursue,” the company said in a statement.

The deal would effectively quash Charter Communications months long quest to acquire Time Warner Cable – it launched a $132.50 per share bid for TWC on Jan. 13 and on Tuesday put forth a new slate of directors it believes would be more friendly to a deal. Comcast had been rumored to be a part of the Charter deal, but only to purchase Time Warner Cable systems in New York City and the Carolinas after a formal deal was reached. Reports surfaced early yesterday that Comcast was close to an agreement to purchase the New York City system, but those talks apparently escalated to include the entire company.

Although it will ultimately depend on the structure of the deal, it seems to give TWC what it wanted – a fair valuation. In rejecting Charter’s Jan. 13 offer, TWC’s board said the company was worth $160 per share.

Both the FCC and Justice Department will take a long, hard look at any proposed Comcast/TWC deal.  That doesn’t mean it is impossible, especially since it would give the FCC a chance to put conditions, like online access, on TWC and extend those currently on Comcast per the NBCU deal.

Comcast is also subject to network neutrality conditions as part of the NBCU deal—the FCC said the condition would stick no matter what the courts decided. With the D.C. Circuit having thrown out the heart of the rules. The deal could allow the FCC to put those conditions on TWC , and extend them on Comcast.

But consolidation critics will push back hard. Within hours of the reports, Free Press CEO Craig Aaron was calling it a ‘disaster” for consumers.

"In an already uncompetitive market with high prices that keep going up and up, a merger of the two biggest cable companies should be unthinkable,” he said. “This deal would be a disaster for consumers and must be stopped.”

“Unthinkable” was also Public Knowledge SVP Harold Feld’s reaction back in January when asked about the possibility of a Comcast/TWC combo.  "Comcast cannot be allowed to purchase Time Warner Cable.  Antitrust authorities and the FCC must stop it,” said Public Knowledge senior staff attorney John Bergmeyer at the news that a deal could be in the offing. --John Eggerton contributed to this story.