Charter Communications to Acquire Time Warner Cable for $55B


Charter TWC

As changes continue to ripple through the media world and US cable industry consolidation continues, Charter Communications is buying Time Warner Cable (TWC) for $55 billion, while the deal terms places the value of Time Warner Cable at $78.7 billion.

The merged Charter, Time Warner Cable and Bright House Networks, which will be named New Charter, will have 23 million customers, making it the second-largest cable provider in the US after Comcast, which has around 27 million customers.

This is Charter’s fourth attempt to acquire TWC in the past three years, and the door was opened after Comcast abandoned its $45 billion merger bid in large part due to resistance from regulators—who must still approve Charter’s bid.

Before the news was announced this morning, Bloomberg and The Wall Street Journal reported that a deal was looming after FCC chairman Tom Wheeler spoke with top management at Charter and TWC, assuring them there was no ban on such mergers.

“The Commission will look to see how American consumers would benefit if the deal were to be approved,” Wheeler said in a statement this morning. “In applying the public interest test, an absence of harm is not sufficient.”

In late March, Charter acquired Bright House Networks—the sixth-largest cable operator in the US, serving 2 million video customers in Florida, Alabama, Indiana, Michigan and California—for $10.4 billion, a partnership they reaffirmed just last week.

Tom Rutledge, Charter’s President and CEO, stated in a press release at the time, “Bright House Networks provides Charter with important operating, financial and tax benefits, as well as strategic flexibility.”

Charter Communications Spectrum

What’s not clear is if Charter’s Spectrum brand—bundling its triple play of voice, video and broadband—will continue at the merged cable company.

While details of the merged company’s branding are worked out, one clear winner in this deal is billionaire media mogul John Malone, chairman of Liberty Media, which owns 27 percent of Charter and grew it what now becomes America’s second-largest cable company.

“The timing of this deal clearly shows how desperate Time Warner Cable is to be acquired,” said Paolo Pescatore, analyst with technology research company CCS Insight, in the New York Times. “A tie-up with another cable provider makes perfect sense given the altering landscape in the broadcast industry.”

Telecoms are clearly jockeying for position while tech-savvy companies like Amazon and Netflix are redrawing the consumer-cable map, including AT&T agreeing to buy DirecTV last year for $48.5 billion, and now Verizon buying AOL.

“The teams at Charter, Time Warner Cable and Bright House Networks are filled with the innovators of our industry,” said Rutledge, who will serve as New Charter’s president and CEO, in a press release.

“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.”

Rutledge added, “Put simply, the scale of New Charter, along with the combined talents we can bring to bear, position us to deliver a communications future that will unleash the full power of the two-way, interactive cable network.”