Cable Company Mergers: Charter/Bright House To Follow Comcast/Time Warner?

It’s looking like the big are getting bigger, thanks to possible cable company mergers.

According to the U.S. News and World Report, Charter Communications, Inc., the nation’s fourth-largest cable provider, has agreed to a merger with Bright House Communication, Inc., the nation’s sixth-largest cable provider. Charter has offered the sum of $10.4 billion for the merger. This is a continuing and growing trend where cable providers are seemingly headed to a form of monopolization.

If the merger gets regulatory approval, a partnership will be created, with Charter controlling 73.7 percent of the newly-created company, and Bright House parent company Advance/Newhouse controlling 26.3 percent.

“We think the combination with Charter gives our employees, our customers and Advance/Newhouse the strongest prospects for the future,” Bright House CEO Steven Miron said.

The cable provider dominos began to fall after the merger in 2011 of Comcast/NBC Universal in 2011. Now, Comcast and Time Warner are the two giant partners in the latest merger talks.

However, no mergers or new sales acquisitions will be allowed by the FCC, thanks in no small part to the recently announced merger between Comcast and Time Warner for $45 million in February 2015, which would combine two of the largest cable providers in the nation. AT&T in May 2015 agreed to buy DirecTV for $48.5 million dollars. Once thought to be a cakewalk through their regulatory hearings, now both mergers are in danger of falling apart since the FCC has taken so long to approve or disapprove of the hearing.

According to the Christian Science Monitor, the cash-and-stock deal boosted Charter’s stock almost nine percent in premarket trading after Tuesday’s report by Reuters.

Tom Rutledge, President and CEO of Charter Communications said, “Bright House Networks provides Charter with important operating, financial and tax benefits, as well as strategic flexibility. Bright House has built outstanding cable systems in attractive markets that are either complete, or contiguous with the New Charter footprint. This acquisition enhances our scale, and solidifies New Charter as the second largest cable operator in the US.”

Bright House, controlled by the Newhouse Company, has over two million customer in Orlando and Tampa Bay, and throughout the states of Alabama, Indiana, Michigan and California.

Goldman Sachs and LionTree Advisors will serve Charter Communications as financial advisors for this transaction, while Wachtell, Lipton, Rosen & Katz will serve as Charter’s Council, and Kirkland and Ellis LLP is advising Charter on overall financing.

Will our nation’s cable provider businesses continue to dwindle in number as they increase in size? Will new outlets for content and entertainment continue to emerge, causing cable providers more headaches?

[Image courtesy of the Consumerist]