Time Warner Cable Inc.’s shareholders do not want the Comcast takeover deal to go through. Those shareholders even brought a lawsuit as they felt that a resultant merger would bring together the two largest cable television companies and would bring about “high regulatory hurdles -the result of unfair dealing.” According to Bloomberg, the lawsuit brought by the shareholders aimed at halting the “sale of the company at an unfair price through an unfair and self-serving process to Comcast.” For months now the price wars have happened as vote after vote was tossed in the air and arguments going back and forth about this matter continued.
Comcast’s $45 billion dollar sale was a valuated at a 20% premium compared to the offer that Charter Communications had made for Time Warner Cable. An interesting point in the deal is that as Time Warner Cable investor’s come on board with Comcast, they will have a stock with less volatility, more aligned to the beta of the market. Also, “shareholders will gain a stake in a company with about half the leverage of Charter.” Ultimately, leverage has a clear relationship with risk.
Time Warner’s business faces “industry-wide decline in cable-TV viewership.” Especially as HULU and YouTube and other web based viewing has started to compete with television for viewers and precious adspace.
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