Charter Communications and Bright House Network are in talks to merge with Time Warner Cable. As of Monday, the companies had only been in talks about acquiring the company, this was confirmed Tuesday. Charter Communications is the fourth-largest cable operator in the United States and Bright House Networks is the sixth largest owner of cable systems. Bright House Networks will be merged with the deal.
Multiple attempts have been made before by Charter Communications to purchase Time Warner Cable, but have been rejected since 2013.
According to The Wall Street Journal, changes were made in the company’s approach to acquire it that made the deal go a lot smoother this time. The purchase of over $55 billion was made with the use of cash and stock. This is a $10 billion increase from Comcast’s original offer of $65 billion. The offer was made based on the estimation that one share was worth $195.
Craig Moffett, an analyst at MoffettNathanson in New York said, “The idea that Time Warner Cable and Charter are merging isn’t a surprise, but the price raises some eyebrows.”
Moffett went on to speculate that the increase in price could be due to the other bidder.
This purchase will be one of the two made by Charter Communications. They are also purchasing Bright House Networks for $10.4 billion.
Charter Communications is backed my Liberty Media Corporation. Liberty own subsidiaries in Sirius XM Holdings Inc., Atlanta National League Baseball Club Inc., Live Nation Entertainment Inc. and have small investments in Viacom Inc.
According to the New York Times, “Analysts said that Charter’s bid for Time Warner Cable highlighted the need for cable and broadband companies to join forces as the industry experience its latest round of consolidation.”
These cable company mergers come after a shift in how people watched their television, like the use of streaming sites like Hulu and Netflix.
According to The Wall Street Journal, “Operators must contend with the onset of cable “cord-cutting” as frustrated consumer drop connections, the rise of streaming-video competitors from Netflix Inc. to Apple Inc. an expected fights with TV-channel owners over which networks are worth keeping in a bundle.
There was uncertainty up until now as to whether the deal would go through, because a billionaire from France named Patrick Drahi, who founded a multinational telecommunications company named Altice.
Drahi and Charter Communications weren’t the only ones who were trying to purchase Time Warner Cable. In April, Comcast had to forfeit their plans to purchase Time Warner Cable because of regulations that prevented them to do so.
According to CNN, “Government regulators were very concerned that Comcast’s acquisition of Time Warner Cable would be anticompetitive, partly because the combined company would have provided internet access to so many homes.”
These regulations didn’t apply to the Charter Communication’s and Bright House Network’s acquisition of Time Warner Cable makes it the nation’s second largest cable television operator, where Comcast stands as the first largest cable operator.
With the purchase, Charter Communications will now have 12 million broadband subscribers.
This number is a culmination of their 4.1 million cable subscribers and 4.9 million broadband subscribers.
Bright House has 2 million cable subscribers.
Charter Communications CEO Tom Rutledge said, “We look forward to completing the transaction as planned, and our teams are working together to make that happen.”
Charter Communications will now be known as New Charter, and their services will be sold under the name Spectrum.
According to The Verge, the purchases “means that the new company will soon have 23.9 million customers in 41 states.”
These transactions are expected to be completed by the end of 2015.