Comcast (CMCSA) and Time Warner Cable to Meet with Justice Department This Week
Shares of Comcast Corporation (CMCSA) were up +0.66 or +1.13 percent to $59.08 per share in Monday's premarket after news over the weekend that the company, along with Time Warner Cable (TWC) would meet with the Justice Department to discuss their merger this Wednesday. Comcast Corp. stock closed at $58.42, down -1.25 or -2.09 percent in Monday's regular trading session.
New York City based Time Warner Cable Inc. is the nation's second largest cable telecom provider, operating in 29 states with 31 operating divisions. Originally named Warner Cable Communications, the company, controlled by Time Warner at the time was spun out of the parent corporation in March of 2009. The company continues to use the Time Warner brand but has no corporate affiliation with cable channels owned by Time Warner such as HBO or CNN.
According to a report by Bloomberg on Friday, regulators at both the Justice Department's antitrust division and the Federal Communications Commission were close to recommending a block to the proposed $45 billion merger between the two companies. Comcast first made a bid for Time Warner Cable on February 13th of last year.
A spokesperson for Comcast said, "The Comcast/Time Warner Cable transaction will result in significant consumer benefits - faster broadband speeds, access to a superior video experience, and more competition in business services resulting in billions of dollars of cost savings, adding that, "These benefits have been essentially unchallenged in the record - and all can be achieved without any reduction of competition. As a result, there is no basis for a lawsuit to block the transaction.
Time Warner Cable stated that, "The regulatory process remains fluid, and we do not intend to comment on our interim dealings with the DOJ, FCC or other regulators. As we have said, we believe the transaction is pro-competitive, in the public interest and that there is no basis for regulators to block the deal.
Regulators are concerned that a merged Comcast/Time Warner would have negotiating power over TV programmers, which get payments from cable operators to show their content. Nevertheless, cable providers argue that the merger could benefit programmers. Comcast and Time Warner say that the merger would improve service and have agreed to net neutrality guidelines that would require them to treat all internet traffic equally.
The meeting between the two companies and the Justice Department is scheduled for this Wednesday and may have the agency require additional measures for the merger to go through. Both Comcast and Time Warner Cable have already agreed to divest 3.9 million customers to Charter.
Both Time Warner Cable and Comcast stocks are up fractionally in this morning's premarket, indicating that investors are proceeding cautiously after the news. Any significant move in either stock will probably not take place until after this Wednesday's results.
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