PHILADELPHIA and STAMFORD, Conn., April
28, 2014 /PRNewswire/ -- Comcast Corporation
(Nasdaq: CMCSA, CMCSK) and Charter Communications (Nasdaq: CHTR)
today announced that the companies have reached an agreement (the
"Agreement") on a series of tax-efficient transactions, whereby the
combined Comcast-Time Warner Cable entity, following completion of
Comcast's previously announced merger with Time Warner Cable, will
divest systems resulting in a net reduction of approximately 3.9
million video customers. The divestiture follows through on
Comcast's willingness to reduce its post-merger managed subscriber
total to less than 30 percent of total national MVPD subscribers,
while maintaining the compelling strategic and financial rationale
of its proposed merger with Time Warner Cable.
Pursuant to the Agreement, and following the close of the
Comcast-Time Warner Cable merger, Charter will acquire
approximately 1.4 million existing Time Warner Cable subscribers,
increasing Charter's current residential and commercial video
customer base from 4.4 million to approximately 5.7 million, and
making Charter the second largest cable operator in the United
States.[1] Charter and Comcast will also each transfer
approximately 1.6 million customers respectively. In addition,
Charter, through a tax free reorganization, will form a new holding
company (New Charter) that will own 100% of Charter, and acquire an
approximate 33 percent stake in a new publicly-traded cable
provider to be spun-off by Comcast serving approximately 2.5
million customers ("SpinCo"). Charter will provide management
services to SpinCo. In aggregate, today's announced transactions
will significantly enhance Charter's scale and improve both
companies geographic footprint, driving operational efficiencies
for Comcast, Charter and SpinCo.
The Agreement has been approved by the Boards of Directors of
both companies and Time Warner Cable's Board has consented to the
Agreement as required under the Comcast-Time Warner Cable merger
agreement.
The Agreement will be executed via three separate transactions,
which are subject to the completion of the proposed Comcast-Time
Warner Cable merger:
- Comcast will divest Time Warner Cable systems serving
approximately 1.4 million existing Time Warner Cable customers
directly to Charter for cash. Charter expects to fund the purchase
with proceeds from debt, and to have approximately a 5 times debt
to EBITDA leverage ratio at closing.
- Comcast and Charter will transfer assets serving approximately
1.6 million existing Time Warner Cable customers and 1.6 million
Charter customers in a tax-efficient like kind exchange, improving
the geographic presence of both companies, leading to greater
operational efficiencies, improved technology deployment and
enhanced customer service.
- Comcast will form and spin off to its shareholders a new,
independent, publicly-traded company that will operate systems
serving approximately 2.5 million existing Comcast customers.
Comcast shareholders, including the former Time Warner Cable
shareholders, are expected to own approximately 67 percent of
SpinCo, while New Charter is expected to directly own approximately
33 percent of SpinCo. SpinCo expects to incur leverage of
approximately 5 times estimated pro-forma EBITDA, and New Charter
will then acquire its interest in SpinCo by issuing New Charter
stock to Comcast shareholders (including former Time Warner Cable
shareholders). SpinCo's nine-member Board of Directors will include
six independent directors and three directors designated by
Charter. Comcast will hold no ownership interest in SpinCo (or
Charter) and will have no role in managing SpinCo.
The transfer of systems, asset purchase and SpinCo acquisition
will be valued at a 7.125 times 2014 EBITDA multiple (as defined by
the parties), and Charter will make additional payments to Comcast
over time as tax benefits from the asset sale are realized.
As a result of these transactions, following the completion of
the merger between Comcast and Time Warner Cable, Comcast's managed
residential subscribers will be below 30 percent of the total MVPD
subscribers in the United States,
and approximately the same market share as Comcast's subscriber
base after its completion of both the 2002 AT&T Broadband
transaction and the 2006 Adelphia transaction – and Charter's
subscriber base will increase by 1.4 million to a total of 5.7
million.
Comcast has reaffirmed that, after taking into account the
transactions with Charter, it continues to expect its merger with
Time Warner Cable to generate approximately $1.5 billion in operating efficiencies. Comcast
shareholders will receive meaningful value with shares in New
Charter, as well as new shares in SpinCo. In addition, Comcast
intends to use proceeds from these transactions to reduce its debt
in a leverage-neutral manner and expand its share buyback
program.
"Today's Agreement follows through on our willingness to divest
subscribers, while also marking an important step in our merger
with Time Warner Cable," said Brian
Roberts, Chairman and Chief Executive Officer, Comcast
Corporation. "These transactions enable us to deliver meaningful
value to our shareholders. The realignment of key cable markets
achieved in these transactions will enable Comcast to fill in our
footprint and deliver operational efficiencies and technology
improvements. We look forward to working with the management teams
at Time Warner Cable, Charter and the new entity to close these
transactions and ensure a smooth transition for the customers and
employees of all companies."
"Charter's new customers will benefit from our philosophy of
providing highly valued products, featuring enhanced on-demand,
interactive video and increased broadband speeds, all in a
simplified package designed to provide better value and service,"
said Tom Rutledge, President and
Chief Executive Officer of Charter Communications. "The
transactions announced today will provide Charter with greater
scale, growth opportunities and improved geographical
rationalization of our cable systems, which in turn will drive
value for shareholders and more effective customer service. And
through our meaningful ownership in and board representation at
SpinCo, we can help it achieve similar market share growth in the
markets it serves."
The transactions are subject to a number of conditions,
including the closing of the Comcast-Time Warner Cable merger,
receipt of Hart-Scott-Rodino, FCC and other required regulatory
approvals, Charter shareholder approval, and various other
matters.
J.P. Morgan and Paul J. Taubman
acted as financial advisors to Comcast and Davis Polk & Wardwell LLP and Willkie Farr & Gallagher LLP are its legal
advisors.
Goldman Sachs and LionTree Advisors are serving as lead
financial advisors to Charter in connection with this transaction.
Guggenheim Securities is also a financial advisor to Charter. BofA
Merrill Lynch, Credit Suisse, and Deutsche Bank Securities Inc. are
also financial advisors to Charter, and together with Goldman
Sachs, are leading the financing for the transaction. The law firms
Wachtell, Lipton, Rosen & Katz and Kirkland & Ellis LLP are
also representing Charter.
Teleconference and Webcast for Financial Community
Charter and Comcast will host a conference call on Monday, April 28, 2014 at 8:00 a.m. Eastern Time (ET) related to the
contents of this release.
The conference call will be webcast live via Charter's website
at charter.com. The webcast can be accessed by selecting "Investor
& News Center" from the lower menu on the home page. The call
will be archived in the "Investor & News Center" in the
"Financial Information" section on the left beginning two hours
after completion of the call. Participants should go to the webcast
link no later than 10 minutes prior to the start time to
register.
The conference call and related materials will also be broadcast
live and posted on Comcast's Investor Relations website at
www.cmcsa.com or www.cmcsk.com.
Those participating via telephone should dial 866-919-0894 no
later than 10 minutes prior to the call. International participants
should dial 706-679-9379. The conference ID code for the call is
35997372. A replay of the call will be available at 855-859-2056 or
404-537-3406 beginning two hours after the completion of the call
through the end of business on May 28,
2014. The conference ID code for the replay is 35997372.
About Comcast Corporation
Comcast Corporation
(Nasdaq: CMCSA, CMCSK) is a global media and technology company
with two primary businesses, Comcast Cable and NBCUniversal.
Comcast Cable is the nation's largest video, high-speed Internet
and phone provider to residential customers under the XFINITY brand
and also provides these services to businesses. NBCUniversal
operates 30 news, entertainment and sports cable networks, the NBC
and Telemundo broadcast networks, television production operations,
television station groups, Universal Pictures and Universal Parks
and Resorts. Visit www.comcastcorporation.com for more information.
About Charter Communications
Charter (NASDAQ: CHTR)
is a leading broadband communications company and the
fourth-largest cable operator in the
United States. Charter provides a full range of advanced
broadband services, including advanced Charter TV® video
entertainment programming, Charter Internet® access, and Charter
Phone®. Charter Business® similarly provides scalable, tailored,
and cost-effective broadband communications solutions to business
organizations, such as business-to-business Internet access, data
networking, business telephone, video and music entertainment
services, and wireless backhaul. Charter's advertising sales and
production services are sold under the Charter Media® brand. More
information about Charter can be found at charter.com.
Important Information For Investors And Shareholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed
transaction between Comcast Corporation ("Comcast") and Charter
Communications, Inc. ("Charter"), Charter will file with the
Securities and Exchange Commission ("SEC") a registration statement
on Form S-4 that will include a proxy statement of Charter that
also constitutes a prospectus of Charter, and a definitive proxy
statement/prospectus will be mailed to shareholders of Charter.
INVESTORS AND SECURITY HOLDERS OF COMCAST AND CHARTER ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL
BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders
will be able to obtain free copies of the registration statement
and the proxy statement/prospectus (when available) and other
documents filed with the SEC by Comcast or Charter through the
website maintained by the SEC at http://www.sec.gov. Copies
of the documents filed with the SEC by Comcast are available free
of charge on Comcast's website at http://cmcsa.com or by contacting
Comcast's Investor Relations Department at 866-281-2100. Copies of
the documents filed with the SEC by Charter will be available free
of charge on Charter's website at charter.com, in the "Investor and
News Center" near the bottom of the page, or by contacting
Charter's Investor Relations Department at 203-905-7955.
In addition, in connection with the proposed transaction between
Comcast and Time Warner Cable Inc. ("Time Warner Cable"), on
March 20, 2014, Comcast filed with
the SEC a registration statement on Form S-4 containing a
preliminary joint proxy statement of Comcast and Time Warner Cable
that also constitutes a preliminary prospectus of Comcast.
The registration statement has not yet become effective.
After the registration statement is declared effective by the SEC,
a definitive joint proxy statement/prospectus will be mailed to
shareholders of Comcast and Time Warner Cable. INVESTORS AND
SECURITY HOLDERS OF COMCAST AND TIME WARNER CABLE ARE URGED TO READ
THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED OR
THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain free copies of the
registration statement and the joint proxy statement/prospectus and
other documents filed with the SEC by Comcast or Time Warner Cable
through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the
SEC by Comcast are available free of charge on Comcast's website at
http://cmcsa.com or by contacting Comcast's Investor Relations
Department at 866-281-2100. Copies of the documents filed
with the SEC by Time Warner Cable will be available free of charge
on Time Warner Cable's website at http://ir.timewarnercable.com or
by contacting Time Warner Cable's Investor Relations Department at
877-446-3689.
Shareholders of Comcast and Time Warner Cable are not being
asked to vote on the proposed transaction between Comcast and
Charter, and the proposed transaction between Comcast and Time
Warner Cable is not contingent upon the proposed transaction
between Comcast and Charter.
Comcast, Time Warner Cable, Charter and their respective
directors and certain of their respective executive officers may be
considered participants in the solicitation of proxies in
connection with the proposed transaction between Comcast and Time
Warner Cable, and Comcast, Charter and their respective directors
and certain of their respective executive officers may be
considered participants in the solicitation of proxies in
connection with the proposed transaction between Comcast and
Charter. Information about the directors and executive officers of
Time Warner Cable is set forth in its Annual Report on Form 10-K
for the year ended December 31, 2013,
which was filed with the SEC on February 18,
2014, and its preliminary proxy statement for its 2014
annual meeting of stockholders, which was filed with the SEC on
April 8, 2014. Information
about the directors and executive officers of Comcast is set forth
in its Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC
on February 12, 2014, and its proxy
statement for its 2014 annual meeting of stockholders, which was
filed with the SEC on April 11,
2014. Information about the directors and executive officers
of Charter is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2013, which
was filed with the SEC on February 21,
2014, and its proxy statement for its 2014 annual meeting of
stockholders, which was filed with the SEC on March 27, 2014. These documents can be
obtained free of charge from the sources indicated above.
Additional information regarding the participants in the proxy
solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, are contained in the
preliminary joint proxy statement/prospectus of Comcast and Time
Warner Cable filed with the SEC and will be contained in the
definitive joint proxy statement/prospectus of Comcast and Time
Warner Cable and other relevant materials to be filed with the SEC
when they become available, and will also be contained in the
preliminary proxy statement/prospectus of Charter when it becomes
available.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this communication regarding the proposed
acquisition of Time Warner Cable by Comcast and the proposed
transaction between Comcast and Charter, including any statements
regarding the expected timetable for completing the transactions,
benefits and synergies of the transactions, future opportunities
for the respective companies and products, and any other statements
regarding Comcast's, Time Warner Cable's and Charter's future
expectations, beliefs, plans, objectives, financial conditions,
assumptions or future events or performance that are not historical
facts are "forward-looking" statements made within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
statements are often, but not always, made through the use of words
or phrases such as "may", "believe," "anticipate," "could",
"should," "intend," "plan," "will," "expect(s)," "estimate(s),"
"project(s)," "forecast(s)", "positioned," "strategy," "outlook"
and similar expressions. All such forward-looking statements
involve estimates and assumptions that are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from the results expressed in the statements.
Among the key factors that could cause actual results to differ
materially from those projected in the forward-looking statements
are the following: the timing to consummate the proposed
transactions; the risk that a condition to closing either of the
proposed transactions may not be satisfied; the risk that a
regulatory approval that may be required for either of the proposed
transactions is not obtained or is obtained subject to conditions
that are not anticipated; the parties' ability to achieve the
synergies and value creation contemplated by the proposed
transactions; the parties' ability to promptly, efficiently and
effectively integrate acquired operations into their own
operations; and the diversion of management time on
transaction-related issues. Additional information concerning these
and other factors can be found in Comcast's, Time Warner Cable\'s
and Charter's respective filings with the SEC, including Comcast's,
Time Warner Cable's and Charter's most recent Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K. Comcast, Time Warner Cable and Charter assume no
obligation to update any forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof.
[1]Charter customer count is based on its reporting
methodologies; net additions and SpinCo on respective TWC and
Comcast reporting methodologies, where there may be small
definitional differences. Totals may not recalculate due to
rounding.
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SOURCE Charter Communications, Inc.