Time Warner, Comcast seal deal on purchase

Thursday, April 21, 2005 | 9:27 a.m.

NEW YORK -- Time Warner Inc. and Comcast Corp., the two largest cable TV companies in the country, announced today that they had reached an agreement to buy the assets of the bankrupt cable company Adelphia Communications Corp. in a deal valued at $17.6 billion in cash and stock.

The deal beat out a last-minute bid by Cablevision Systems Corp., a New York-area cable TV company, and still faces several steps before closing, including approval by regulators and bankruptcy court.

Time Warner and Comcast will pay $12.7 billion in cash and 16 percent of the stock in Time Warner's cable subsidiary, Time Warner Cable Inc., which will become a publicly traded company at the time the deal closes. A source close to the deal but speaking on condition of anonymity valued the stock part of the payment at $4.9 billion. Time Warner and Comcast will also swap cable customers.

As part of the multipart deal, Comcast will give back its 21 percent interest in Time Warner Cable and pay about $1.5 billion in cash. It will wind up with an additional 1.8 million cable subscribers as a result of the deal. Time Warner will gain 3.5 million subscribers.

Investors applauded the news that a final deal had been reached after several months of discussions. Time Warner's shares rose 28 cents or 1.7 percent to $17.21 in early trading on the New York Stock Exchange, while Comcast rose 63 cents or 2 percent to $32.13, also on the NYSE.