*Citi analyst calls for merger of Comcast, Time Warner
*Sees costs savings of about $2.7 billion
*Says potential of deal should support share prices
NEW YORK, Sept 10 A prominent analyst on
Thursday called for a merger of Comcast Corp (CMCSA.O) and Time
Warner Cable TWC.N, saying such a blockbuster deal would
offer a host of benefits for both cable giants.
Citi analyst Jason Bazinet, in a note to clients, said a
deal between Comcast and Time Warner would give the combination
37 percent of the pay TV market plus offer about $2.7 billion
in cost savings. Shares of both companies, he predicted, will
trade higher on a potential announcement.
Bazinet's prediction comes on the heels of a court case
that struck down a rule limiting cable companies to no more
than 30 percent of the U.S. pay-TV market.
While the decision opens the door to more dealmaking, other
industry analysts cautioned that Comcast would likely look
toward small- to mid-sized acquisitions rather than pursue a
big deal [N09365118]. Comcast currently has about 25 percent of
the pay TV market.
Comcast Chief Operating Officer Steve Burke said during a
presentation that the ruling did not change the top cable
company's world view.
"We don't wake up every day saying how do we get bigger in
cable," said Burke speaking at an investor conference. "But if
there is a way to acquire cable systems for what we consider to
be a good price, ones that are contiguous or well-managed, we
would certainly look at whatever was out there."
In his note, Citi's Bazinet listed seven benefits of a
combination of Comcast and Time Warner, saying among them it
would lead to cost savings, offer an investment grade rating,
and simplifies a wireless strategy.
(Reporting by Paul Thomasch, editing by Dave Zimmerman)