Time Warner and Comcast may not be merging anytime soon, but that doesn’t mean Time Warner isn’t looking for another way to grow: Charter Communications has just announced a plan to merge with Time Warner in a deal that would create a new company that would be the nation’s second-largest cable provider (behind Comcast).
While the FCC effectively killed the Comcast/Time Warner merger, FCC chair Tom Wheeler says each potential merger is reviewed based on its own merits. In other words, the regulatory agency will look carefully at the latest plan, but just because it wasn’t fond of the last proposal for a merger of two of the biggest players in the cable industry doesn’t mean that this proposed merger will face the same challenges.
It probably doesn’t hurt that the deal would create a new company that would be the second largest cable provider in the US rather than making the biggest provider even bigger.
Charter also plans to acquire a smaller cable provider called Bright House Network. If the merger with Time Warner and the acquisition of Bright House goes through, the new company (which is called “New Charter” in the press release) would have a subscriber base of 23.9 million customers in 41 states.
Rival Comcast has about 27 million subscribers.
Among other things, Charter says if the deals go through, it’d continue to remove analog signals from Time Warner and Bright House to free up network capacity and offer more HD content and faster internet speeds, reduce costs through synergies, and invest in better customer service. It all sounds good on paper (as you’d expect, since Charter wrote the paper). What remains to be seen is whether consolidating the cable and internet business further than it already is has an impact on the cost and quality of service for customers.