The companies agreed to merge their joint venture cable systems in Kansas City, Mo., and Texas into one centrally run business for the next two years. Both companies will own 50 percent of the combined cable network, and Time Warner Cable will continue to run the business' daily operations.
Comcast and Time Warner Cable, the nation's two largest cable systems, respectively, decided to merge the systems to evenly divide the assets once their venture ends in two years. Once the deal expires, the companies can then decide to split the assets in half, with one company buying systems in Kansas City and south Texas, and the other company buying the system in Houston.
The new arrangement equalizes ownership over two systems-- Kansas City's 300,000 subscribers and Texas' 1.2 million customers--that when combined are valued at $5 billion.
The deal "provides a simplified structure and a clear path of dissolution as each party chooses," said Time Warner spokeswoman Tricia Primrose.
Comcast and Time Warner have been negotiating over the future of the two systems for many months. Time Warner Cable has not hid its desire to expand its cable presence, and executives have publicly stated their intention to grow the business and pursue a public offering of its business.
Much of Time Warner's desires stem from overall growth in the cable sector. Cable companies have maintained a healthy lead in the broadband market over rival technologies such as digital subscriber line access. Cable companies also have begun bundling broadband and voice services into their core video assets.
Time Warner Chief Executive Richard Parsons in recent weeks has said he wants to resolve the media giant's ownership entanglement with Comcast. Now that issues regarding these joint ventures have been temporarily resolved, Time Warner is expected to try to unravel Comcast's 21 percent ownership of Time Warner Cable, according to public statements.
