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Charter’s Time Warner Cable Buy Approved by US but with Conditions


04/26/2016


Charter’s Time Warner Cable Buy Approved by US but with Conditions
Approval for a deal that would create the second-largest U.S. broadband provider and third-largest video provider was given by the U.S. Justice Department on Monday. The antitrust approval was given to the merger to Charter Communications Inc's proposed purchase of Time Warner Cable Inc and Bright House networks.
 
Coming at a time when the pay television industry faces stagnation due to new competition from over-the-web rivals like Netflix and Hulu, the Justice Department's approval carried conditions designed to protect competition.
 
The deal is yet to be approved by the Federal Communications Commission and its chairman on Monday said he, too, was prepared to put conditions on the merger aimed at promoting broadband competition.
 
As part of its approval, Charter agreed to refrain from telling its content providers that they cannot also sell shows online, the Justice Department said.
 
"Continued growth of OVDs (online video) promises to deliver more competitive choices and a greater ability for consumers to customize their consumption of video content to their individual viewing preferences and budgets," the Justice Department said in a court filing.
 
"The emergence of OVDs threatens to upend the competitive landscape," it added.
 
With conditions that "will directly benefit consumers by bringing and protecting competition to the video marketplace and increasing broadband deployment," an order seeking approval of the merger was circulated by Tom Wheeler, Chairman at the FCC.
 
With one million served by a broadband competitor, the conditions would require Charter to extend high speed internet access to another two million customers within five years is approved, Wheeler said.
 
Additionally, Charter would be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of internet traffic to broadband customers and would not be permitted to charge usage-based prices or impose data caps. The agreement would "demonstrate the viability of one broadband provider overbuilding another," he said.
 
It was not immediately clear when the FCC would decide. While Charter has sought three, both sets of conditions would be in place for seven years.
 
Excluding debt, the deal has been valued at $56.7 billion by Charter for Time Warner Cable and $10.4 billion for Bright House Networks.
 
It was pleased with both the Justice Department and FCC's actions, Charter said.
 
"We are confident New Charter will be a leading competitor in the broadband and video markets," the company said in a statement.
 
Shareholders of both companies have approved the deal. The deal requires just one more outstanding approval from one last state, California. An administrative judge has recommended the state's public utilities commission approve the deal, which could come as early as May 12.

Charter had pursued TWC as far back as 2013 and is backed by billionaire John Malone's Liberty Media Corp. the Time Warner Cable had earlier rejected the unsolicited approaches by Charter and instead found a white knight in Comcast Corp, the No. 1 U.S. cable services provider after the two companies had acrimonious exchanges in 2013 and early 2014.
 
However after U.S. regulators raised concerns, Comcast's $45 billion bid fell through a year ago.
 
Charter and TWC resumed deal talks following the failed bid by Comcast.
 
(Source:www.reuters.com)