It's Official: Comcast Drops Time Warner Cable Deal
"Today we move on," says chairman and CEO Brian Roberts. "We structured this deal so that if the government didn’t agree, we could walk away."
Comcast made it official on Friday morning, formally withdrawing its plans to acquire Time Warner Cable in a $45 billion deal.
News of the decision had emerged late Thursday when Bloomberg News reported about it. Comcast and Time Warner Cable representatives had declined to comment on Thursday, but on Friday confirmed the decision to abandon the combination.
"Today, we move on," Comcast chairman and CEO Brian Roberts said. "Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away." The deal didn't include a break-up fee like other deals.
He added: "Comcast NBCUniversal is a unique company with strong momentum. Throughout this entire process, our employees have kept their eye on the ball and we have had fantastic operating results. I want to thank them and the employees of Time Warner Cable for their tireless efforts."
Concluded Roberts: "I couldn’t be more proud of this company and I am truly excited for what’s next.”
Time Warner Cable in a statement highlighted that the companies have "mutually agreed to terminate their merger agreement." Also affected is a deal under which Charter Communications would have acquired cable systems from the combined company. It was contingent on the Comcast-TWC deal being completed.
Time Warner Cable chairman and CEO Robert Marcus said Friday: "We have always believed that Time Warner Cable is a one-of-a-kind asset. We are strong and getting stronger. Throughout this process, we’ve been laser focused on executing our operating plan and investing in our plant, products and people to deliver great experiences to our customers. Through our strong operational execution and smart capital allocation, we are confident we will continue to create significant value for shareholders."
He added: “I’m extremely proud of the professionalism, dedication and resiliency our 55,000 employees have shown over the past year and thank them for their continued commitment to Time Warner Cable."
The FCC had on Wednesday signaled that it had key concerns about the deal. It was planning a "hearing designation order" that would have put the issue into the hands of an administrative-law judge. In addition, the U.S. Department of Justice has also reportedly had concerns as had many consumer-advocate groups, which had criticized the proposed deal.
Wunderlich Securities analyst Matthew Harrigan said that even without the TWC deal, Comcast's stock remains appealing as the company has solid business trends. "Comcast rides off into the sunset with still big upside off NBC TV, Universal Pictures and [theme] parks," he said.
He and others predict that Charter Communications, in which John Malone's Liberty Broadband owns a big stake, will now make good on its past comments that it would consider a second run at TWC if the Comcast deal doesn't go through. Charter had lost out to Comcast in a bid for TWC, but then struck a deal to buy some cable systems from the merged company.
Charter and Liberty will "enthusiastically look at buying all of TWC," Harrigan predicted.
"Charter’s business prospects to create new customers remain fundamentally unchanged," said Charter president and CEO Tom Rutledge. "We continue to innovate on our networks in ways that will enhance the experience of our customers and drive value for our shareholders. Innovations like our universally compatible, cloud-based Spectrum guide, World Box and standards-based downloadable security make our services the type of experiences today’s customers demand. We will continue to drive growth through innovation in our current footprint and we will continue to evaluate investment opportunities that arise through scale."
Charter recently agreed to acquire Bright House Networks, the sixth-largest U.S. cable operator with approximately 2 million video customers in central Florida, Alabama, Indiana, Michigan and California, for $10.4 billion. The deal was, among other things, contingent on the Comcast-TWC deal and related transaction with Charter going through. Charter and Bright House have a period though during which they can decide whether to go ahead with the deal now that the Comcast transaction has been abandoned.