Comcast in deal with Charter as it seeks approval for TWC

Mon Apr 28, 2014 1:54pm EDT
 
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By Liana B. Baker and Soham Chatterjee

(Reuters) - Comcast Corp on Monday agreed to a three-way deal with Charter Communications Inc as part of Comcast's efforts to win regulatory approvals for its proposed $45 billion purchase of Time Warner Cable Inc.

The transaction would make Charter, which lost out to Comcast in a bid to acquire Time Warner Cable, the second-largest cable provider in the United States.

The agreement would leave Comcast with less than 30 percent of the U.S. residential cable or satellite TV market, a factor seen as a key step to pleasing regulators. Charter would have about 6 percent of the pay-TV market, with an eventual shot to climb to 9 percent.

Under the deal, Charter would pay Comcast $7.3 billion for 1.4 million subscribers. Comcast would divest another 2.5 million subscribers into a new publicly traded company that would be two-thirds owned by Comcast shareholders and one-third owned by Charter.

In addition, Comcast and Charter would trade about 1.6 million subscribers in different parts of the country.

"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," Pivotal Research Group analyst Jeff Wlodarczak told Reuters, adding that the deal was good for both parties.

Comcast is awaiting approval by the U.S. Justice Department and the U.S. Federal Communications Commission to take over Time Warner Cable, something that likely will take many months and could impact the future of cable and broadband.

Charter's shares were up almost 8 percent at $139.90 in mid-morning trading while Comcast shares were up 1.4 percent at   Continued...

 
A Comcast sign is shown on the side of a vehicle in San Francisco, California February 13, 2014. REUTERS/Robert Galbraith