Charter to buy Time Warner Cable in new mega-deal
NEW YORK, United States (AFP) — Charter Communications announced Tuesday it is acquiring rival Time Warner Cable to create a powerful new player in the US pay TV and broadband sector.
The deal worth US$55.3 billion plus debt comes weeks after Comcast abandoned a bid for TWC in the face of opposition from US antitrust regulators. Including debt, the transaction is valued at US$78.7 billion.
The merger, which also needs regulatory approval, would create a major new rival for Comcast, whose plan for TWC drew fierce opposition from consumer groups and fueled fears of creating a dominant player in the broadband Internet market.
Charter also brings into the mix Bright House Networks, for which it announced a buyout earlier this year.
The combination of Charter, Time Warner Cable and Bright House will have 23.9 million customers in 41 states.
In a statement, Charter said the deal would lead to improvements in both Internet and video services.
“The teams at Charter, Time Warner Cable and Bright House Networks are filled with the innovators of our industry … That spirit of innovation will live on, and it will create real benefits and great long-term value for the customers, shareholders and employees of all three companies,” said Tom Rutledge, president and chief executive of Charter who will also head the combined group.
“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. In addition, we will drive greater competition through further deployment of new competitive facilities-based Wi-Fi networks in public places, and the expansion of the facilities footprint of optical networks to serve the large, small and medium sized business services marketplace.”
TWC was also courted by France’s Altice in exploratory talks. But the group headed by Franco-Israeli telecoms and media magnate Patrick Drahi will not make a counter-bid, a source close to the company told AFP.
The number two US cable firm, TWC was spun off in 2009 from media giant Time Warner.
The consolidation comes with the cable TV industry seeking to adapt to a shift of viewing habits to online media such as Netflix and Hulu, which allow people to watch on demand.
Although the number of cable “cord cutters” has been relatively modest in recent years, analysts expect this trend to accelerate, which could have a significant impact on the television industry.
Analysts said the deal is likely to get approval but could face scrutiny from regulators.
“We do not expect hurdles as large as those Comcast faced,” said Barclays analyst Kannan Venkateshwar in a note to clients, arguing that the area covered would be less than that of Comcast.
“However, given the degree of political pushback the Comcast deal received, we believe the degree of scrutiny on the deal is still likely to be quite intense even if the deal is smaller in scale.”
The plan comes amid significant dealmaking in the sector, with a planned US$48.5 billion bid for AT&T for satellite broadcaster DirecTV also being reviewed by regulators.
Rutledge said he expected the plan to clear, in part because Charter is not a content firm like Comcast, which owns NBCUniversal.
“This is smaller than Comcast cable today, let alone Comcast NBCUniversal,” he told CNBC television.
“Charter won’t be vertically integrated. We work well with other programmers.”
The deal represents a coup for magnate John Malone’s holding company Liberty Broadband, which is the controlling shareholder at Charter and will hold voting power of 25 percent of the new company under the plan.