With the announcement that Comcast is buying Time Warner Cable for $45.2 billion in stock, cable advertisers and subscribers should be aware that prices will probably be increasing.
The merger would combine the two largest U.S. cable companies and create far less competition from other phone and satellite providers. The transaction, subject to approval by stockholders and regulators, is expected to be completed by the end of 2014.
Comcast wants access in 19 of the nation's 20 largest TV markets. If approved, the effect would be extraordinary leverage with content providers and advertisers. Remember the Time Warner battle with CBS?
CableTV budgets in the top markets will mostly likely be affected. Media buyers need to prepare for the increase in cable ad rates.
It is good news for the Time Warner Cable investors. They will receive 2.875 Comcast stock for each of their shares. The purchase values each Time Warner Cable share at $158.82.
Time Warner’s CEO would also profit from the sale. Rob Marcus, who recently attained the top position on January 1 is set to pocket $50 million if Time Warner Cable is sold and he is replaced while he is CEO.
If successful, the deal will be the second time in little more than a year that Comcast has been instrumental in changing the U.S. media landscape. Its $17 billion acquisition of NBC Universal was completed in 2013.
Time Warner customers probably won’t see any changes immediately. The announcement suggests Time Warner customers will be given access to Comcast’s broad library of video-on-demand offerings and programming accessible on mobile devices.
Comcast has an impressive content library. It owns 50,000 video on demand choices and 300,000 streaming offerings on its XfinityTV.com and a new cloud-based DVR system.
While offering more choices, the cost is most likely going to increase. How will subscribers react when they already are leaving in droves? This could also affect those who have already left the cable world for other options like Netflix.
Consumers like a media environment that allows binge TV viewing. It allows you to watch your favorite show’s episodes in a short period of time and is a real threat to cable companies as more viewers use it.
This is a brilliant move for Comcast. This deal would allow Comcast to gain subscribers, but also increase its internet customer base. All those subscribers that leave cable will still want broadband in their homes and Comcast can retain part of their business.
This merger may eventually impact how fast will you will be able to access streaming services like Netflix and Amazon Prime. Comcast may be planning to migrate the bulk of desirable content behind the cable paywall.
Cable advertisers and subscribers may see big changes in 2015. How do you feel about the sale?