Contentious Comcast/Time Warner Deal Could Save $12.2M in Real Estate ‘Synergies’ [Updated]
Comcast expects to save $1.5 billion from “synergies” resulting from its $45 billion merger with Time Warner Cable, including estimated savings of more than $12 million yearly after TWC leaves its Columbus Circle headquarters.
A report from CoStar Group stated that the anticipated cost-saving measure after the termination of the $91.27 per square foot lease in 2016 would save Comcast about $12.2 million a year.
The 133,214-square-foot lease runs through December 2016 and includes three five-year extension options, but TWC is expected to vacate that space at the end of its lease in December 2016 and move in with Time Warner at 30 Hudson Yards, where the parent firm has committed to one million square feet of commercial space.
Michael Angelakis, vice chairman and CFO of Comcast, told CoStar that the balance of the $1.5 billion in savings will come from modifications resulting from such things as shaving overhead costs and creating operating and capital expenditure synergies.
“Our analysis includes run-rate synergies of approximately $1.5 billion in operating expenses and approximately $400 million in capital expenditures,” he said. “Our target for realizing the full operating expense synergy impact is three years from closing, but we believe the realization can be frontloaded, with more than 50 percent realized in year one.”
There was no mention of additional real estate synergies that might lie ahead.
Some consumers and advocacy groups are worried about the pending merger. A report from ibtimes.com said the merger promises the “worst customer service disaster in history.” Meanwhile, a TWC shareholder has filed a lawsuit to block the deal, claiming that executives prioritized their own bank accounts over investors’ interests.
Comcast, one of the most active corporate buyers of property in each of the last several years, will acquire Time Warner Cable for $45.2 billion in equity value. Last month the company announced plans to build a $1.2 billion skyscraper in Philadelphia; in November it purchased 10 Universal City Plaza in Universal City, CA, for $395 million; and also last year it bought General Electric’s 49 percent stake in NBCUniversal for $16.7 billion, including a separate deal to buy properties used by NBCUniversal at 30 Rockefeller Plaza.
Update: Though the CoStar Group report stated that Time Warner Cable could move in with Time Warner at Hudson Yards, a Time Warner spokesperson denied that, noting that a 2009 spinoff made TWC a separate publicly traded company “with no affiliation” to Time Warner, Inc. “The Time Warner Inc. planned move to Hudson Yards does not include TWC,” he said.