(Adds analyst comment)
By Liana B. Baker
March 31 The 3 million subscribers that Comcast
Corp plans to divest as part of a proposed takeover of
Time Warner Cable Inc might be worth roughly $18
billion, according to a source familiar with the matter.
The company has received strong interest from other cable
companies and investors, the source added. While the subscribers
could be sold off, Comcast is also considering a spinoff of the
assets into a separate publicly traded company.
At $18 billion, the 3 million subscribers would be valued at
approximately $6,000 each. The value of the subscribers can
change, depending on their location and the financial health of
their cable network, the source added.
ISI analyst Vijay Jayant said $6000 per subscriber would
only be a reasonable valuation for a top tier cable market, and
would represent a premium to other publicly listed cable
companies that average between $4000-$5000 per subscriber.
"We don't know which markets these are, but if these are
contiguous subscribers in smaller markets and not New York for
example, I don't know if Comcast can get $6000 per subscriber,"
Comcast said on Monday it is planning to increase its share
buyback program by more than 80 percent as the $45 billion
takeover of Time Warner Cable undergoes regulatory review.
Comcast is considering adding $2.5 billion to its current $3
billion buyback plan, a Comcast representative said. The size of
the repurchase could be higher, depending on the proceeds from
the sale of assets related to the divestitures, the company
Comcast can increase the buyback after Time Warner Cable
shareholders vote to approve the deal, the company said. A date
has not been set yet for the vote.
Comcast has said it is willing to divest 3 million
subscribers to reduce the concerns about competition of U.S.
regulators. The U.S. Justice Department and the Federal
Communications Commission are expected to take months to review
the merger, focusing on antitrust and public interest concerns,
After the takeover, Comcast would have a footprint spanning
from New York to Los Angeles, with a nearly 30 percent share of
the pay TV market, as well as a strong position in providing
broadband Internet services.
Bloomberg earlier reported on the increased share repurchase
and that Comcast divestitures could be worth at least $17.6
(Additional reporting by Arnab Sen in Bangalore; Editing by
Saumyadeb Chakrabarty, Jeffrey Benkoe and Andre Grenon)