Time Warner Cable Charter Merger — Is This Deal Good for You?
Well, Comcast’s attempted merger with Time Warner Cable didn’t pass government regulatory muster, but Charter Communications, a smaller company who agreed to buy some of the Time Warner business from Comcast in an attempt to gain approval for the original acquisition, is stepping up to the plate. The interesting thing is Charter attempted to acquire Time Warner earlier this decade in a hostile takeover before Comcast’s recently failed bid. Greg Maffei, the CEO of Liberty Broadband Corporation, Charter’s parent company, said this transaction will be friendlier than the first attempted buyout.
The new “Time Warner Cable Charter” raises some interesting issues for consumers if this latest merger wins Federal approval? Will you enjoy faster Internet speeds and more Digital Television channels all at a cheaper price? Let’s take a closer look at the details.
A 55 Billion Dollar Deal between Charter and Time Warner
The deal between Charter Communications and Time Warner Cable is valued at $55 billion, with Charter paying over $195 for each share of Time Warner, a significantly higher amount than the company’s closing stock price from Friday May 22nd. Adding to the fun, Charter is also purchasing Bright House Networks, a smaller cable company that now becomes part of this new Cable TV and Internet behemoth. With Charter as the 4th largest Cable company in the business, and Time Warner as the second, this potential new firm stands to compete with Comcast for domination of both the Cable TV and Internet markets.
With more Cable TV customers dropping their accounts in favor of streaming services like Netflix and Hulu using their High Speed Internet provider, it makes sense for the leaders in the industry to place more emphasis on growing their number of Internet subscribers. The new Time Warner Cable Charter company boasts nearly 24 million accounts in 41 states, including the country’s two largest metro areas — New York City and Los Angeles.
Federal Regulatory Approval still Required before Merger Happens
Still, doesn’t one company controlling those many subscribers raise the same regulatory issues that scuttled the Comcast Time Warner merger? “Not so fast my friend,” says FCC Chief, Tom Wheeler. “The FCC reviews every merger on its merits and determines whether it would be in the public interest. The Commission will look to see how American consumers would benefit if the deal were to be approved,” commented Wheeler.
With even President Obama noting the lack of competition in the U.S. broadband industry, approval of this merger isn’t a slam dunk, but it does stand a better chance than Time Warner’s deal with Comcast. The new Charter company would control 30 percent of all High Speed Internet subscriptions, compared to the over 50 percent controlled by a merged Comcast and Time Warner. In fact, the FCC may approve the merger simply to create more robust competition for Comcast.
Are Faster Internet Speeds Coming to Your Home?
Charter CEO, Tom Rutledge, feels the larger scale of this merged “New Charter” allows the company to increase its efforts in rolling out faster Internet access to subscribers across the country. “With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully-featured voice products, at highly competitive prices,” commented Rutledge. In fact, current Time Warner customers can expect their base Internet speeds to improve at no additional cost, since Charter offers a higher speed at a similar monthly fee.
On the other hand, some regulators worry that only two giant companies in the ISP market — Comcast and New Charter — raises the potential to squash competition in the nascent streaming video market. We’ll know the FCC’s final answer soon enough, as the merger is expected to close by the end of the year.
If you currently subscribe to either Charter or Time Warner, don’t expect any significant changes to happen this year. 2016 is a better bet for seeing significant changes in Internet speeds. Of course, the potential merger between DirecTV and AT&T later this year will also significantly change the market. Stay tuned!
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