April 29, 2014

Charter Communications to acquire customers from Comcast and Time Warner Cable

Charter Communications may become the second largest cable operator, following the sale of 1.4 million Time Warner customers and 2.5 million Comcast customers, CNN reported. The sale is part of an effort to help the Time Warner Cable/Comcast merger receive final approval from the U.S. Federal Communications Commission and the Justice Department. 

In February, it was announced that Comcast had plans to acquire Time Warner Cable, however, the deal is still pending regulatory approval. 

"Comcast wanted to do this deal now with Charter so it could get in front of regulators at the Justice Department and the FCC at the same time as the Time Warner Cable deal," a source told Reuters. 

Several deals were recently announced surrounding the merger. According to Adweek, as a result of the deal, Comcast's subscribers will be reduced in order to comprise "less than 30 percent of national cable subscribers." This move was in an effort for the deal to be able to be in accordance with regulations. Even with less than 30 percent of subscribers, the companies would still have almost 10 million more subscribers than Dish or DirectTV, according to CNN. 

"For Charter, this deal is a transformative event and sets them up over time to consolidate the balance of the rest of the cable industry," Jeff Wlodarczak, an analyst for Pivotal Research Group, told Reuters.

Because of the approval process, it may take several more months before the deal is finally approved, Reuters reported. Through this acquisition strategy, the companies are looking to strike a deal that will allow the companies to merge within regulatory parameters, as there had been prior concern expressed over how the merger of the two companies would affect other players in the communications industry.