April 29, 2014
Charter Communications may have figured out another plan to become the nation’s second-largest cable operator, despite losing out to Comcast in its bid to acquire Time Warner Cable. As part of a new three-part deal with Comcast announced yesterday, Charter plans to pick up subscribers that Comcast will be divesting. Should the deals be completed, Charter will acquire a stake in a new public company to be launched by Comcast, and swap subscribers with the cable giant.
“The transactions announced today will provide Charter with greater scale, growth opportunities and improved geographical rationalization of our cable systems, which, in turn, will drive value for shareholders and more effective customer service,” said Thomas Rutledge, Charter’s chief executive.
The deals are contingent upon Comcast’s successful acquisition of TWC and related regulatory approvals.
Charter had initially challenged Comcast’s proposed TWC acquisition. Cooperation between the two operators marks a shift from recent months, one that could be important to both companies.
“For Charter and John C. Malone, the billionaire media mogul who last year took a stake in the company through Liberty Media, the deal would establish Charter as a legitimate nationwide cable provider, with added scale and a path to grow still larger,” reports The New York Times.
“For Comcast, this deal will probably help it win the approval of antitrust regulators, who are wary of the company’s growing market power. Should the transaction go through, it would reduce the cable operator’s subscriber base below 30 million, a symbolic figure that Comcast believes will smooth its Time Warner Cable purchase.”
“Today’s agreement follows through on our willingness to divest subscribers, while also marking an important step in our merger with Time Warner Cable,” said Brian Roberts, Comcast chief exec. “The realignment of key cable markets achieved in these transactions will enable Comcast to fill in our footprint and deliver operational efficiencies and technology improvements.”
“This morning’s announcement is a win-win-win and moves us one step closer to completing our merger with Comcast,” added Time Warner Cable in a statement.