Analysts say the consolidation could help Comcast to compete with satellite providers like DirecTV, wireless phone companies like AT&T and new streaming services like Netflix.
"This isn't about TV anymore it's about controlling a fatter, more intelligent pipe for multiple services that emanate from it", including broadband Internet, phone and home security monitoring, said Tim Hanlon, the founder of the Vertere Group, an investment advisory firm that focuses on media and technology.
Time Warner Cable owners will be offered 2.875 Comcast shares for each share they own, valuing Time Warner Cable at about $158.82 per share. The two companies expect the merger to take effect by the end of the year, but regulators are likely to take a close look at the potential impact on consumers.
To address those concerns, Comcast said it was prepared to divest about 3 million subscribers. But it would still have about 30 million subscribers. The proposed deal ends months of jockeying for control of Time Warner Cable, the second biggest U.S. supplier of cable television with about 11 million subscribers.
Smaller rival Charter wanted to buy Time Warner Cable, indicating last month it was ready to pay about $130 per share. Time Warner Cable called that price "grossly inadequate" and countered with a suggestion of $160 per share, very close to Comcast's offer.
But Comcast had cast a shadow over the negotiations, and had reportedly held talks with Charter about how to split up Time Warner Cable's territories. Now, Comcast will gain even more leverage over the country's marketplace for television, broadband Internet and phone services. Comcast has about 23 million television subscribers.
