Comcast Pulls Out of Time Warner Deal

In February 2014, Comcast (CMCSK) and Time Warner Cable (TWC) announced plans for a mega-merger. Folks across the industry got nervous. Two months later, DirecTV (DTV) and AT&T (T) announced their deal.

I always tell investors that any merger has the chance of falling through. Today, Comcast said they’re backing out of the Time Warner Cable deal. Both stocks have trailed the S&P 500 since the deal was announced 14 months ago.


Apparently, the regulatory concessions were just too much. Charter Communications (CHTR) is standing on the sidelines ready to move:

The planned $68 billion deal including debt, 431 days in the making, is facing resistance from regulators. Comcast could ultimately walk away if concessions needed to win approval are too strict, people familiar with the matter said.

Given that Time Warner Cable’s revenue and earnings are on the upswing, analysts see any shareholder losses in the absence of a deal as minimal and probably temporary. The stock could fall about 7 percent at most, according to the lowest estimate compiled by Bloomberg. That compares with a potential gain of 11 percent if the deal still happens.

Backstopping Time Warner Cable’s share price is the expectation that Charter Communications Inc. would buy the company if Comcast doesn’t. Charter, backed by billionaire dealmaker John Malone, was the original suitor for Time Warner Cable back in 2013 before Comcast unexpectedly trumped its offer.

Posted by on April 23rd, 2015 at 3:48 pm

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