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Charter to merge with Time Warner Cable in $78.7bn deal

US pay-television operator Charter Communications has today (Tuesday) said it will acquire fellow cable operator Time Warner Cable in a deal valued at $78.7bn (€69.3bn).

The announcement follows speculation earlier this month of a merger between the second and third largest US cable operators as they seek to better compete with market leader Comcast.

The equity part of the deal is $55.76bn based on TWC’s diluted shares outstanding as of March 31. The company had long-term debt of $22.64bn, according to the Reuters news agency. The companies said in a statement that the offer values each TWC share at around $195.71 based on Charter’s closing price on May 20.

The agreement is set to lead to the formation of a new public parent company entitled New Charter. In addition, Charter and Advance/Newhouse Partnership, a parent of smaller operator Bright House Networks, have today announced that the two companies have amended the agreement which the two parties signed and announced on March 31, whereby Charter will acquire Bright House for $10.4bn.

That agreement, as amended, provides for Charter and Advance/Newhouse to form a new partnership of which New Charter will own between approximately 86 to 87 per cent and of which Advance/Newhouse will own between approximately 13 to 14 per cent.

Charter’s move comes after board members of TWC and Comcast last month admitted defeat in their efforts to salvage a proposed $45.2bn takeover of the former by the US media company.

The takeover, which was approved by the shareholders of both companies in October 2014, would have led to Comcast taking control of the NBC Sports Group division of the Time Warner Cable-owned NBCUniversal media company, as well as other sports-media services and channels.

However, the deal was scuppered by regulatory opposition from the Department of Justice and the Federal Communications Commission.

The Charter-Time Warner Cable transaction is subject to approval by both Charter and Time Warner Cable shareholders, regulatory review, and other customary conditions. Closure is anticipated by the end of the year.

Commenting on the deal, Tom Rutledge, president and chief executive of Charter Communications, said: “The teams at Charter, Time Warner Cable and Bright House Networks are filled with the innovators of our industry. Representatives of each of these companies have invented some of the most revolutionary communications products ever created; innovations like video on demand, VOIP phone service, remote storage DVR, cable TV through an app, downloadable security and the first backward-compatible, cloud-based user interface.”

He added: “Put simply, the scale of New Charter, along with the combined talents we can bring to bear, position us to deliver a communications future that will unleash the full power of the two-way, interactive cable network.”

Time Warner Cable’s sports properties include a 25-year deal, from 2014 to 2038, for the media rights to MLB baseball franchise the Los Angeles Dodgers – an agreement worth $8.35bn.