Comcast negotiates deal to cut Time Warner Cable stake
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September 27, 2004
Comcast said Monday that it has an option to cut its stake in Time Warner Cable to 17 percent from 21 percent in exchange for stock in a unit that will hold cable-television systems and cash.
Philadelphia-based Comcast ranks as the largest U.S. cable operator, while Time Warner Cable is the second-biggest entity in the industry.
In a joint press release, Time Warner Chairman Dick Parsons said the looming deal with Comcast signifies a "mutually beneficial outcome" for the two companies, which have been waging a battle for cable supremacy.
The agreement gives Comcast the option, which can be exercised between Dec. 1 and April 1, 2005, to require Time Warner Cable to redeem a portion of the Time Warner Cable common stock held by a trust controlled by Comcast in exchange for all of the common stock of a Time Warner Cable subsidiary.
At the time of such a swap, the unit will own cable systems serving some 90,000 basic subscribers and will have about $750 million in cash. In addition, the Comcast trust agreed not to request prior to next April 1 that Time Warner Cable register the shares in Time Warner Cable held by the trust for sale in a public offering.
Comcast's shares eased 4 cents to $27.63 on Friday, while Time Warner slipped 3 cents to end at $16.50.