Updated from 11:16 a.m ET with response from advocacy groups, analyst comments and share prices.
NEW YORK (TheStreet) -- Comcast's (CMCSA) all-stock $158.82-a-share deal for Time Warner Cable (TWC) is far superior to anything that Charter Communications (CHTR) could cobble up through debt financing, synergies, net operating loss carryforwards and the like. The tie-up of the nation's biggest two cable giants may also prove less of an antitrust issue than some may expect, and may turn out to be a healthy development for the U.S. cable industry.
(The companies announced confirmation of the merger agreement in a press release Thursday).
The outcome of Time Warner Cable's takeover -- one seeming certainty amid six months of speculation -- may have fooled even the savviest cable and media investors. After assembling a $132 a share cash-and-stock bid for Time Warner Cable and a hostile slate of directors to push forward the transaction, Charter Communications and its minority shareholder Liberty Media (LMCA) appear to have lost the sweepstakes for the biggest cable industry consolidation in a generation.
It also means Brian Roberts of Comcast may have outmaneuvered John Malone of Liberty Media in a duel among two of the industry's most prolific deal-makers. Still, the deal may be less about the personalities involved and more about the economic realities of the cable industry.
That Time Warner Cable is poised to fall in the hands of Comcast in an all-stock deal, instead of Charter Communications in a highly leveraged takeover, speaks to the unease in the cable and broadcast TV industry, as disruptive technologies such as Netflix (NFLX), Amazon Prime (AMZN), Hulu and Internet behemoths like Google (GOOG), Facebook (FB) and Twitter (TWTR) loom as threats. The $45 billion takeover will pay Time Warner Cable shareholders 2.875 shares of newly issued Comcast common stock for each of their shares.
The most important aspect is Comcast's stock offer vs. a heavily leveraged deal put on the table by Charter Communications, and one which Time Warner Cable rebuffed as too risky for its shareholders. With no new debt and a path towards debt reductions, the combined Comcast and Time Warner Cable will have the financial flexibility to invest heavily in their business and adapt to change, while putting to bed some looming negative developments to the broadband industry that some had feared.
Comcast said on Thursday that net neutrality agreements it agreed to in the acquisition of NBCUniversal will stand in its takeover of Time Warner Cable. It indicates that in the face of flat revenues and declining users, the combined company isn't poised to fight for usage-based broadband pricing, an issue that has alarmed internet firms like Netflix.
A "Dream Combination"
Meanwhile, low debt and a merger that Comcast says will be accretive to its free cash flow means the company and its shareholders have a clear path to profitability. The costs of a riskier deal may ultimately have been borne by customers in poor service, or changing price schemes.
Paulson & Co., a large Time Warner Cable shareholder said the deal was the best possible outcome for shareholders. "This is a dream combination," the hedge fund said in an email to TheStreet.