What you need to know about the deal?
Q: WHAT IS DRIVING THE DEALS IN THE CABLE INDUSTRY?
A: Cable companies are bulking up to survive as the number of cable and satellite TV subscribers slips — more consumers are “cutting the cord” — and competition from streaming video rises, thanks to rivals such as Netflix Inc. They also must fight TV channels over the cost of programming.
Q. WILL CHARTER SUCCEED WHERE COMCAST FAILED?
A. Consumer advocates fiercely opposed Comcast Corp.’s $45 billion takeover bid for Time Warner Cable, which would have married the nation’s two biggest cable providers with a media powerhouse, Comcast’s NBCUniversal. Regulators worried that the combination would be too dominant in high-speed Internet service and might undermine the streaming-video industry that is changing TV viewing.
Charter’s tie-up with Time Warner Cable and Bright House still isn’t as big as Comcast by itself. And it doesn’t own a big entertainment company like NBCUniversal.
Q. WHAT DOES THIS MEAN FOR SUBSCRIBERS?
Tom Rutledge, president and chief executive of Charter Communications, said during a question and answer session that the combined company will mean “lower prices for faster services.”
Q. WHEN CAN LOCAL SUBSCRIBERS EXPECT A CHANGE?
A. Local Time Warner Cable executives said they expect the deal to close by the end of the year, and another up to five months to begin many aspects of the customer integration process.
The Associated Press contributed to this story.
Charter Communications’ $55.3 billion purchase of Time Warner Cable will create one of the nation’s largest cable television and Internet providers, and give the merged company a stronghold in Ohio, where Time Warner Cable has 2.13 million customers, including 630,000 in southwest Ohio.
The deal announced Tuesday also will better position the new company to compete as more consumers look online for TV programming, a local expert said.
Cable and satellite companies are bulking up to survive as they lose increasing numbers of TV subscribers to streaming video services such as Netflix and Hulu, while costs for TV, sports and movie programming continue to rise.
“It is going to be a very interesting shake-up because a lot of people are walking away from cable to go to these services which provide them to access to network content and feature film content,” said Dennis Greene, a University of Dayton law professor who teaches constitutional and entertainment law.
Greene said cable’s comprehensive channel package model is becoming a thing of the past amid a rapidly changing TV landscape. Verizon’s FiOS TV service is trying smaller, customizable TV bundles. HBO has launched an online version of its content, HBO Now, that doesn’t require a cable TV subscription.
“Once they go to that cafeteria menu it becomes a new day, because the cafeteria menu allows you to decide exactly what it is that you want,” Greene said. As a result, cable and satellite companies are trying to become more responsive to consumers, “who basically want to pay less for access to the material,” he said.
The Charter deal comes a month after Comcast, the country’s largest cable provider and owner of NBCUniversal, walked away from a $45.2 billion bid for Time Warner Cable, the country’s No. 2 cable company, after intense pressure from regulators. The government worried that the company would be able to undermine increasingly popular online video competitors such as Netflix because the bigger Comcast would have more than half the country’s high-speed Internet customers.
Whether government regulators will approve the Charter deal remains to be seen. Charter also announced Tuesday that it is buying Bright House Networks, a smaller cable provider, for $10.4 billion.
Charter, combined with Time Warner Cable and Bright House, will have nearly 24 million customers, compared with Comcast’s 27.2 million. It also will lag AT&T, whose pending deal with DirecTV would give it 26.4 million U.S. TV customers and 16.1 million fixed Internet customers, as well as tens of millions of wireless customers.
“While the combined company will be the third largest video provider, behind Comcast and ATT/DirecTV, it will be much smaller than a combined Comcast and Time Warner Cable would have been,” said Michael Pedelty, Time Warner Cable’s Midwest spokesman.
In addition, the combined company won’t own any national programming assets and will serve far fewer broadband subscribers at 25 megabits per second and above on a national level than Comcast does on a standalone basis, Pedelty said.
Time Warner Cable is Ohio’s top pay TV provider, with large customer areas in Cleveland, Akron, Columbus, Cincinnati and Dayton.
Pedelty said the company has 630,000 customers in southwest Ohio, which includes Dayton, Springfield and Cincinnati. Time Warner Cable employs 1,900 workers in southwest Ohio.
Charter officials said the deal will drive investment into the combined company’s advanced broadband network. Combined scale will “accelerate the development of products consumers want,” Pedelty said.
Current Time Warner Cable subscribers shouldn’t expect to see their channel lineups or email addresses change anytime soon.
“We anticipate the deal to close by the end of the year, and another up to five months to begin many aspects of the customer integration process. In the meantime, we don’t have any plans to make customer-impacting changes associated with the deal,” Pedelty said.
The Associated Press contributed to this report.
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