What Charter-Time Warner Cable deal could mean for consumers

31 May 2015 | Author: | No comments yet »

Cable merger is nothing to sweat in Dallas viewing area.

Sixteen months ago, Charter Communications said the shares of Time Warner Cable were worth $37 billion. Just two years ago, the man who made a fortune building Tele-Communications into a US broadcasting titan was spending much of his time trying to repeat the trick in Europe through London-based Liberty Global. Through a mix of golden parachutes, advisory fees and investment returns, a handful of cable executives, traders and bankers stand to reap enormous profits when and if the transaction closes.

It’s puzzling because he’s right that monopolies are not something that we desire to have in our economy but when we talk about monopolies we have to be very careful indeed over what we’re identifying as a monopoly. Marcus’ compensation package includes $4.5 million in base salary, $15 million in continued bonus payments and stock awards valued at $57.3 million as of December 31, 2014, according to the New York-based company’s May 18 proxy filing. Major cable TV systems again ranked among the worst in overall customer satisfaction for TV service in the latest telcom survey released today from Consumer Reports National Research Center.

Now, with the Comcast deal having fallen through, Charter is paying $57 billion for the same company, an increase of roughly 50 percent from its initial bid. Losing out to Comcast was considered a big blow to Malone after he tiptoed back into the US cable waters in 2013 by becoming the biggest shareholder in Charter. Ratings for the value provided in the TV and Internet components were especially awful: 38 out of the 39 Internet services, and 20 out of the 24 TV providers, received the lowest scores possible. Because he could well be terminated without cause after the deal closes — another way to say he would be leaving the company after selling it to a competitor — Mr.

Verizon FiOS and satellite TV companies DirecTV and Dish scored higher in customer satisfaction among TV service providers in categories such as picture quality, channel selection, reliability and ease of use. Today’s bid at $195.71 a share, 14 per cent more than Time Warner Cable’s May 22 close, would catapult Charter from the fourth-largest cable company to the No. 2 slot behind Comcast. All this pressures the industry to consolidate, cut costs and boost investment in broadband service, a segment in which cable operators still enjoy competitive advantages. No surprise, CR also uncovered “behavioral shifts” in the way consumers are accessing TV. 19 percent of those 45 and younger and 31 percent of survey participants ages 26 to 35 now use a paid video streaming service as their main viewing source. 16 percent of those in the 18-25 range cited free online video as their primary connection for content.

Comcast would have owned 30 percent of the pay-TV market and more than half of U.S. broadband if it had bought Time Warner Cable; Charter will control about 17 percent of pay TV and 30 percent of broadband. Netflix is far and away the favorite paid service, cited by 81 percent of subscribers, trailed by Amazon Prime (46 percent) and Hulu Plus (11 percent.) Having lost one bidding war, Charter didn’t want to lose another. “They felt pressure,” says David Heger, a telecommunications analyst at Edward Jones. “Charter figured they had better move fast before it got taken out from under them.” How can Charter justify the higher price?

Sewage pipes in an area for example: there’s really no point at all in insisting that there should be two such sets of pipes so that we can have market competition. The business model of pay TV-Internet providers is one in which new customers are drawn in with low introductory rates, which escalate higher and higher the longer you’re a subscriber. Being bigger should help it negotiate better prices for everything from advertising to technology and, importantly, it will have more leverage with TV channel owners such as Disney and Viacom.

He ultimately struck a deal with Comcast last year that also would have given him a billowing golden parachute worth $80 million, but that agreement fell apart last month. These customer service agents might otherwise be providing, you know, actual customer service, but instead they focus on negotiating with subscribers who call to complain about rising monthly bills. After all, instead of tweaking the structure to eliminate complaints about pricing, the system all but encourages subscribers to complain, haggle, and threaten to drop the service in order to be treated fairly. One routinely complains and, amid lengthy, frustrating phone calls, is rewarded with monthly rates that are lower than they otherwise would have been. It has minimum Internet speeds of 60 megabits per second and is less expensive than comparable Time Warner tiers, he told analysts in a call last week. “For consumers, this transaction will mean better products at better prices,” Rutledge said, adding that cost savings from the merger would help fund some improvements.

It’s no surprise, then, that both of these categories of subscribers would give their providers extremely low satisfaction ratings and say that they are poor values. Because cable companies have regional monopolies, they don’t have much financial incentive to make things easier for customers, said John Bergmayer, senior staff attorney at Public Knowledge, a consumer advocacy group in Washington.

Rutledge told analysts that Charter “will be expanding our wireless footprint and building out our Wi-Fi networks in a public way,” and that the future may bring “opportunities to create new subscriber relationships that may be based entirely on mobility.” Those are big bets, and Charter in its current form doesn’t have the ability to make them. In theory, golden parachutes are good for shareholders as well as executives, because they encourage C.E.O.s to strike deals instead of resisting to preserve their well-paid jobs. “It does provide appropriate incentives for the executives,” said David F.

Far more important, in fact the only level that is important for our public policy reasons, is that the monopoly largely exists at the local level: Broadband policy discussions usually revolve around the U.S. government’s Federal Communications Commission (FCC ), yet it’s really our local governments and public utilities that impose the most significant barriers to entry. Although the cable and telephone companies spend huge sums of money on advertising trying to lure each others customers, they rarely compete on price. And to some extent (not entirely, high density areas will support more than one physical network, but the average US suburban area probably won’t) this is because service in a local area is a natural monopoly.

Morgan Stanley, the lead adviser, will receive a larger slice, with Citigroup and two independent investment banks — Centerview Partners and Allen & Company — splitting the rest. The only exceptions to this policy in the whole of the 32-nation Organization for Economic Co-operation and Development are the U.S., Mexico and the Slovak Republic, although the Slovaks have recently begun to open up their lines. Because LionTree has fewer than 100 employees, the deal — along with LionTree’s work on Charter’s related acquisition of Bright House Networks — will be a transformative payday for Mr.

The other banks listed as advisers to Charter — including Guggenheim Partners, Bank of America Merrill Lynch and Credit Suisse — may receive little more than credit for the deal and a role in the financing. Paulson paid for that stake, a filing in September 2013 showed that he had already bought about half of it when the stock was trading below $140 a share. To have competition we want the people in Denver and the people in Detroit to have companies competing for their custom actually in Denver and Detroit.

Competition only works if consumers actually have a choice: so choice in each area is what is needed, not a worry about who owns what percentage of the local monopolies. My latest book is “The No Breakfast Fallacy, why the Club of Rome was wrong about us running out of resources.” Amazon and Amazon.co.uk. $6.99 and relevant prices in other currencies.

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UPDATE 1-Western Refining to buy rest of Northern Tier

20 Jan 2016 | Author: | No comments yet »

JPMorgan Chase & Co. Upgrades Northern Tier Energy LP (NTI) to “Neutral”.

Under the deal, Northern Tier unit holders would receive $15 a unit in cash and 0.2986 Western Refining share for each common unit held, or roughly $26.21 a unit based on Monday’s close. EL PASO, Texas and TEMPE, Ariz., Dec. 21, 2015 (GLOBE NEWSWIRE) — Western Refining, Inc. (NYSE:WNR) and Northern Tier Energy LP (NYSE:NTI) today jointly announced that they have entered into a merger agreement whereby Western will acquire all of NTI’s outstanding common units not already owned by Western. Northern Tier Chief Executive Dave Lamp in prepared remarks Monday said that the MLP model “has not been rewarded by the equity market, as evidenced by the historical disconnect between NTI’s high yield and low unit price.” “With a simplified corporate structure and diverse geographic base, the new Western will be well positioned to unlock additional value for shareholders,” Mr. As an alternative to the cash and stock consideration, each NTI unitholder may elect to receive, per NTI unit, either $26.06 in cash or 0.7036 of a share of WNR.

Assuming completion of the proposed transaction, NTI will become a wholly-owned subsidiary of WNR and NTI common units will cease to be publicly traded. Jeff Stevens, President and CEO of WNR said, “The merger of Western and NTI will result in the combined entity owning three of the most profitable independent refineries on a gross margin per barrel basis, with direct pipeline access to advantaged crude oil combined with an integrated retail and wholesale distribution network. The terms of the merger agreement were approved by the WNR Board of Directors and the Conflicts Committee of the Board of Directors of NTI’s general partner, which negotiated the terms on behalf of NTI. Four investment analysts have rated the stock with a hold rating, five have assigned a buy rating and one has issued a strong buy rating to the stock.

The call and slide presentation can be accessed on the Investor Relations section of Western’s website, www.wnr.com, and on the Investor Relations section of Northern Tier’s website at www.northerntier.com. The Company has refining, retail and logistics operations that serve the Petroleum Administration for Defense District II (PADD II) region of the United States. Goldman Sachs & Co. acted as financial advisor to Western, and Vinson & Elkins, Davis Polk & Wardwell and Richards Layton & Finger acted as legal counsel to Western. This press release includes “forward-looking statements” by Western (which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995) and by NTI.

The Company’s retail segment operated 165 convenience stores under the SuperAmerica brand and also supported 89 franchised convenience stores, which are also operated under the SuperAmerica brand. These statements are subject to the risk that the merger is not consummated at all, including due to the inability of Western or NTI to obtain all approvals necessary or the failure of other closing conditions, as well as to the general risks inherent in Western’s and NTI’s businesses and the merged company’s ability to compete in a highly competitive industry.

If you are reading this article on another website, that means this article was illegally copied and re-published to this website in violation of U.S. and International copyright law. In addition, Western’s and Northern Tier’s business and operations involve numerous risks and uncertainties, many of which are beyond Western’s and NTI’s control, which could materially affect their respective financial condition, results of operations and cash flows and those of the merged company.

The forward-looking statements are only as of the date made, and neither Western nor NTI undertake any obligation to (and each expressly disclaims any obligation to) update any forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events. 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 any jurisdiction where such an offer or solicitation is unlawful. Any such offer will be made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, pursuant to a registration statement filed with the SEC. The retail segment includes retail service stations, convenience stores, and unmanned fleet fueling locations in Arizona, Colorado, New Mexico, and Texas. Beyersdorfer (602) 286-1530 Michelle Clemente (602) 286-1533 Northern Tier Investor and Analyst Contact: Paul Anderson (651) 458-6494 Alpha IR Group (651) 769-6700 nti@alpha-ir.com Media Contact: Gary Hanson (602) 286-1777

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