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Charter Communications will buy Time Warner Cable in a deal valued at $78.7 billion, the company announced on Tuesday.
The combination, which values Time Warner Cable at $195.71 per share, will make Charter the country’s second-largest pay-TV company in the country, behind only Comcast, with nearly 24 million customers in 41 states. Charter also will have large footprints in the two biggest markets, New York and Los Angeles.
Charter estimates that after the deal closes, it will have 17.3 million video subscribers and 19.4 million broadband subscribers. By comparison, Comcast has 27.2 million subscribers, with nearly 23 million traditional video subs and 22 million broadband customers, reports Variety.
Charter CEO Tom Rutledge will lead the new company and be offered a new five-year contract.
As part of the deal, Charter and Advance/Newhouse Partnership, the parent company of Bright House Networks, amended the agreement they signed in March. Now, Charter will own approximately 87% of the new partnership, while Advance/Newhouse will own approximately 13%. Charter had announced in March that it was buying Bright House Networks in total for $10.4 billion.
Both deals are expected to close simultaneously.
Comcast had intended to purchase Time Warner Cable in a deal valued at $67 billion, but withdrew its offer in light of opposition from regulatory agencies. Two years ago, Charter had thrown its hat in the ring for Time Warner Cable but was outbid by Comcast.
FCC Chairman Tom Wheeler has already said that the agency plans to look closely at the deal: “The FCC reviews every merger on its merits and determines whether it would be in the public interest,” Wheeler said in a statement. “In applying the public interest test, an absence of harm is not sufficient. The Commission will look to see how American consumers would benefit if the deal were to be approved.”
Public interest advocates are already saying that prospects for this deal to close are better than Comcast’s:“This transaction is qualitatively different than Comcast in that Charter’s corporate reputation is benign or neutral,” said Adonis Hoffman, former chief of staff to FCC Commissioner Mignon Clyburn and now chairman of Business in the Public Interest. “The adverse public interest concerns of the previous deal will not be a factor in this deal—and that bodes very well for its approval.”
When Charter’s deal to buy Time Warner Cable closes, Liberty Broadband will purchase $4.3 billion worth of shares in the new company at $176.95 per Charter share, which was the company’s closing share price on May 20. Liberty Broadband, which is run by cable investor John C. Malone, also will purchase $700 million worth of new Charter shares at $173.00 per share when the Charter-Advance/Newhouse deal closes.
Once both of Charter’s deal closes, Time Warner Cable shareholders, excluding Liberty Broadband and its affiliates, will own between 40% and 44.1% of Charter, while Advance/Newhouse will own between 13 and 14%. Liberty Broadband will own 19 to 20% of the company.
Read more: Variety, Multichannel News, Broadcasting & Cable, The New York Times
Cube photo courtesy of Deadline.com.
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