Charter Communications Inc. will take a majority interest in the country’s sixth-largest cable operator, Bright House Networks, for $10.4 billion in cash and stock, Charter said Tuesday.
Assuming completion of the deal, Charter will become the country’s second-largest cable operator, behind only Comcast. Charter’s share price had jumped nearly 6% by the end of the trading day on Tuesday, down a bit from mid-day highs.
While Charter will own 73.7% of Bright House, the operator’s current owner, Advance/Newhouse, will own the rest.
In addition, major Charter shareholder Liberty Broadband will purchase $700 million worth of shares once the deal is closed, giving it an approximate 19.4% ownership stake in the new company. Advance/Newhouse will give Liberty Broadband a 6% voting proxy on its shares, eventually giving Liberty Broadband total voting power of 25%.
The deal is the latest in a series of consolidations in the pay-TV industry, although the government is still investigating several pending deals.
Comcast has agreed to pay $45 billion to buy Time Warner Cable, with Charter planning to pay $7.3 billion in cash for 1.4 million TWC customers. AT&T also is in the process of buying DirecTV.
Read more: WSJ
Brief Take: As consumers cut cords and go over the top, pay-TV providers argue that they have to get bigger in order to stay competitive. Whether the FCC and Department of Justice agrees, remains to be seen.
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