February 20, 2014
(Editor’s Note: This post is an excerpt from an article appearing in Practitioner Insights on WestlawNext)
A stockholder of Time Warner Cable Inc. has filed a lawsuit against Time Warner, certain of its officers and directors, Comcast Corp. and its merger subsidiary in response to Comcast’s proposed $45.2 billion acquisition of the cable company. Comcast and Time Warner are currently the No. 1 and No. 2 providers of pay cable television.
In addition to allegations that the acquisition fails to maximize shareholder value and that the individual defendants will “reap disproportionate benefits” from the deal, the plaintiff, Breffni Barrett, alleged that the deal will face substantial regulatory hurdles — a viewpoint shared among many industry analysts.
Acquisition faces substantial regulatory hurdles
Barrett alleged in his complaint that because of “Comcast’s dominance in the cable industry, Time Warner’s merger with Comcast raises antitrust issues that another potential acquirer, like Charter [Communications Inc.] for example, may not have faced.” To support his allegations, Barrett cited to information disclosed by the parties in their press release announcing the deal.