According to people familiar with the situation, Charter Communications Inc is about to buy Time Warner Cable Inc for nearly $55 billion. If the two cable television companies merge, the U.S. largest cable provider Comcast Corp. would finally face a redoubtable rival.
Charter is at its second attempt to buy its opponent since last year when a similar proposal was rejected. Sources claim that the merger between the two major cable operators would be beneficial for the declining pay television industry and its customer base.
A stronger company may be more competitive against online rivals such as Netflix or Sony. Sources also believe that a larger operator may mean more savings from negotiations with programmers.
The new deal was unofficially announced Monday, one month after Comcast failed to purchase Time Warner. Last month, the Federal Communications Commission decided that the merger between America’s two largest cable and broadband providers would not benefit customers because it would have crushed competition. In April, Comcast’s bid fro Time Warner was $45.2 billion.
On Friday, Time Warner Cable’s stock value on the market was $171.18, which is considerably better than the $135.31 from the times when Comcast first expressed its plans for a merger.
If Time Warner gets acquired by Charter, the merger would hold control over 20 percent of the high-speed Internet market, while a merger with Comcast would have generated a provider with 40 percent of the market.
Nevertheless, the new deal must be first approved by federal regulators. The FCC chairman Tom Wheeler announced last week that the commission wasn’t against cable mergers, but regulators’ duty was to make sure that such deals did not harm competition or destabilize the market.
Sources also said that the merger would be officially announced Tuesday.
If Charter manages to also buy the U.S. sixth-largest broadband provider Bright House Networks, the new merger would have a customer base of 23 million. Comcast currently boasts with 27 million. Charter-Bright House deal was estimated at $10.4 billion.
Charter started negotiations with Bright House shortly after the Comcast-Time Warner deal was scrapped. Charter’s largest investor Liberty Broadband Corp backed the deal and recently acquired $5 billion worth of Charter stock.
However, Time Warner Cable was also courted by the France-based Altice SA, which extended its operations across the Atlantic when it acquired Suddenlink Communications in an over-the-counter deal.
One of the people familiar with the matter said that Altice’s sudden interest in Time Warner forced Charter to speed up negotiations for the merger. Time Warner declined to comment, while Charter and Altice couldn’t be reached.
Image Source: The Blaze
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