American cable giant Charter Communications is planning to buy two of its competitors, Time Warner Cable and Bright House Networks, creating a network powerhouse to rival Comcast.
The company is ready to pay around $78.7 billion for Time Warner Cable - $55bn in cash and stock, with the rest coming from its debts - and another $10.4 billion for Bright House.
The combined entity, the ‘New Charter’ with the current CEO Tom Rutlege at the helm, would serve cable television and broadband to 23.9 million customers across 41 states. According to CNN, the deal would affect one in six American households.
However, it is yet to be approved by the shareholders and regulators.
Three-way
Charter Communications has around 4.1 million TV subscribers and 4.9 million broadband subscribers, making it the fourth-largest cable operator in the United States by revenue.
But this could change with the acquisition of Time Warner Cable (more than 11 million subscribers) and Bright House Networks (2.2 million subscribers). A merger would help the combined company better compete against traditional rivals like Comcast, AT&T and Verizon as well as emerging threats like Netflix and Amazon Video.
“Representatives of each of these companies have invented some of the most revolutionary communications products ever created; innovations like video on demand, VOIP phone service, remote storage DVR, cable TV through an app, downloadable security and the first backward-compatible, cloud-based user interface,” said Rutledge.
“With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully–featured voice products, at highly competitive prices.”
Charter says the deal will drive investment into advanced broadband networks, including public Wi-Fi and high-speed fiber for small-to-medium businesses. The statement also suggests the new company could launch a mobile network service.
If the deal goes ahead, Time Warner Cable shareholders will own between 40 percent and 44 percent of New Charter. Advance/Newhouse Partnership – the parent company of Bright House Networks – will own around 14 percent. Meanwhile, Liberty Broadband, which owns around a quarter of Charter Communications, will have a 20 percent stake in the new venture.
It is important to remember that Comcast’s recent attempt to purchase Time Warner Cable was met with resistance from the US regulators, who have to evaluate whether a particular deal would be in the public interest.
“The Commission will look to see how American consumers would benefit if the deal were to be approved,” said Federal Communications Commission (FCC) chairman Tom Wheeler on Tuesday.
Comcast’s CEO Brian Roberts approved the acquisition in a public statement: “This deal makes all the sense in the world. I would like to congratulate all the parties.”
If everything goes according to plan, Charter Communications expect to close the announced transactions by the end of 2015.