Charter, Comcast reach $20 bln deal

Charter will gain nearly four million subscribers from a combined Comcast-Time Warner Cable. The deal would vault it into second place from fourth .Fred Katayama reports.

Published

9 months ago

Categories

Finance

Topics

Finance

People

Fred Katayama

Places

United States of America

Companies

Comcast Corporation, Time Warner Inc.

Transcript

Charter lost out to Comcast in the battle for Time Warner Cable, but it extracted a big consolation prize. It'll get nearly 4 million subscribers from the combined Comcast-Time Warner, and that would vault it from fourth to second among cable operators. The deal is valued at $20 billion. It works like this: Comcast pays more than $7 billion to get 1.4 million Time Warner customers. Comcast then spins off 2.5 million customers into a new company in which Charter will buy a stake. Charter's stock rose at the start of trade. Jefferies analyst Mike McCormack said, "We believe the deal is favorable for Charter as the acquisition value is below our initial expectations." This realignment will get Comcast under the old FCC rule that limited cable operators to less then 30 percent of the market - a move aimed at getting the blessing of regulators for its $45 billion merger. It'll use the proceeds to buy back more shares and cut debt. More good news for Charter: It shrank its quarterly loss and boosted revenue by adding video and internet subscribers.