Charter's $56 billion Time Warner Cable deal to face U.S. scrutiny

Tue May 26, 2015 5:59pm EDT
 
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By Malathi Nayak and Diane Bartz

NEW YORK/WASHINGTON (Reuters) - Charter Communications Inc, seeking to remake the U.S. cable television industry by acquiring larger rival Time Warner Cable Inc for $56 billion, will try to skirt the regulatory obstacles that helped sink Comcast Corp's earlier bid for Time Warner Cable.

The combined company would control a big swath of the cable and Internet markets, marking a huge step toward industry consolidation, long advocated by cable pioneer John Malone, Charter's biggest shareholder.

But before that can happen, the Federal Communications Commission will "look to see how American consumers would benefit if the deal were to be approved," said the agency's chairman, Tom Wheeler.

The agreement is the latest example of how cable companies are grappling with declining subscriber numbers as viewers shift to cheaper and more flexible streaming services offered by Netflix Inc, Amazon.com Inc, Hulu and others.

Even premium cable network HBO, owned by Time Warner Cable's former parent, recently started a stand-alone streaming service.

Charter and others have been beefing up their higher-margin Internet businesses through consolidation and partnerships to offset TV subscriber losses.

That market power is likely to be regulators' main focus.The combined companies would control about one-fifth of the U.S. broadband Internet market, according to research firm MoffettNathanson.

The merged company would still be smaller than Comcast, which serves about one-third of U.S. broadband users, said analyst Craig Moffett in a note to clients. He added that "one has to be sober about genuine risks that this deal could still be rejected."   Continued...

 
A Time Warner Cable sign and logo are seen on a Time Warner Cable store in the Manhattan borough of New York City, May 26, 2015. Charter Communications Inc, controlled by cable industry pioneer John Malone, offered to buy Time Warner Cable Inc for $56 billion, seeking to combine the No. 3 and No. 2 U.S. cable operators to compete against market leader Comcast Corp.  REUTERS/Mike Segar