Charter Communications has announced plans to acquire Time Warner Cable for $55 billion in cash and $23 billion in shares (£52 billion altogether). The deal comes shortly after Comcast abandoning its plan to acquire Time Warner Cable for $45 billion (£29 billion).
The aim with the acquisition is to make Charter the largest cable provider in the United States, competing with Comcast for the highest amount of cable customers.
Comcast already had first place, making it harder for the Federal Communications Commission and the Department of Justice—the two review departments—to accept the deal. Charter, on the other hand, is currently fourth in the cable market.
Time Warner Cable adds 50 million broadband customers and 15 million cable TV customers to Charter’s portfolio. The rise in cable TV customers should allow Charter to find cheaper deals with programmers for TV networks.
It is not the first time Charter has tried to acquire TWC, in 2014 the two companies couldn’t work out terms for the deal. Charter has added a few billion onto TWC’s value in the new acquisition deal, apparently enough to interest management.
Unlike the move with Comcast-Time Warner Cable, Charter’s new acquisition brings more competition to Comcast, Verizon and AT&T. The new plans for net neutrality in the US will make it harder for broadband companies to create oligopolies in a state, and may have to fight on price and speed once again.
Charter and TWC both face a decline in cable TV customers and new municipal broadband providers. It will need to keep customers loyal to both TV and broadband, in order to keep revenue high post-acquisition.