In a deal that will affect one in six American households, Charter Communications on Tuesday proposed a three-way merger with two other cable and broadband providers, Time Warner Cable and Bright House Networks.
The combined company will create a new national player in the rapidly changing telecommunications industry.
Charter, backed by the billionaire cable pioneer John Malone, currently has about 4.1 million TV subscribers and 4.9 million broadband subscribers.
If the three-way merger is approved by government regulators, it’ll have 17 million TV subscribers and 18.8 million on the broadband side, making it a counterweight to Comcast, which has about 22 million subscribers.
The companies all have something in common: poor marks on customer satisfaction surveys.
But executives at Charter and Time Warner Cable say they have to band together. By getting bigger, they say, they’ll be able to improve service and exert more influence over the future of television distribution.
Some of the same rationales underpinned Comcast’s bid for Time Warner Cable. But the government stood in the way of that deal, causing Comcast to abandon it last month.
That’s when Charter resumed its pursuit of Time Warner Cable — a pursuit that began before Comcast ever bidded for the cable company.
Time Warner Cable has been highly sought after because of its sheer number of subscribers (more than 11 million, making it the current #2 to Comcast) and its footprint in key markets like New York and Los Angeles.
Why does Charter believe it’ll win governmental approval when Comcast could not? Partly because it’s not Comcast — it’s not already #1 in the industry and it doesn’t own lots of cable channels the way Comcast does.
Earlier this month Federal Communications Commission chairman Tom Wheeler reached out to the CEOs of Time Warner Cable and Charter to say that “just because the FCC’s staff wasn’t convinced that the Comcast deals were in the public interest, they should not assume the agency is against any and all future cable deals,” according to the Wall Street Journal.