Ten years after a proposed merger between cable giants Comcast and TWC was shelved due to regulatory concerns, the deal is now being considered.
Cable companies Charter Communications and Cox Communications announced their merger agreement on Friday. Charter will pay $34.5 billion to acquire Cox.
Among the year’s biggest bargains is this one. One of the biggest TV communications companies in the nation is Charter, better known by its brand Spectrum.
Under the proposed deal, Cox will give Charter its residential cable business in exchange for Charter purchasing Cox’s managed IT and cloud businesses as well as its commercial fiber.
“The merger will create an industry leader in mobile and broadband communications services, seamless video entertainment, and high-quality customer service delivering powerful benefits for American employees, customers, communities, and shareholders,” according to the joint press release.
“This combination will enhance our capacity to innovate and deliver superior, competitively priced products, accompanied by exceptional customer service, to millions of homes and businesses,” stated Chris Winfrey, CEO of Charter.
According to the companies, Cox will hold about 23 percent of the fully diluted shares of the combined company. Cox’s estimated $12 billion in outstanding debt will be assumed by the combined company as part of the agreement.
The stock of Charter (NYSE: CHTR) was up about 2.58% in Friday morning trading. Cox is a corporation which is privately held.
Here’s what to expect from the merger
The deal is anticipated to close concurrently with the merger of Liberty Broadband, which was previously announced. Within a year of the transaction closing, the merged business will be rebranded as Cox Communications.
In the regions that Cox currently serves, Spectrum will take the lead as the brand that interacts with consumers.
Winfrey will remain the CEO. The merged business intends to keep a sizable presence at Cox’s campus in Atlanta and will continue to have its headquarters in Stamford, Connecticut.
Cable companies struggle to retain pay-TV subscribers
What is the reason behind the announcement of this strategic merger? Customers “cut the cord” by canceling their cable subscriptions and moving to streaming services, which has resulted in declining pay-TV subscriber rates for cable companies. The industry has consequently made significant investments in mobile and broadband.
Charter, like the rest of the industry, continues to be losing pay-TV consumers according to the most recent “cord-cutting monitor” report from analyst firm MoffettNathanson. The cable juggernaut lost 123,000 customers in the fourth quarter of 2024.
Overall, Moffett Nathanson projects that the cable industry will continue to lose pay-TV subscribers in the upcoming years, dropping from 67.7 million at the end of the previous year to 51.5 million by 2028. According to the company, the rise in streaming services that mimic cable
If all goes according to plan, Charter will purchase Cox’s current six million subscribers. Regulators and Charter shareholders must approve the proposed merger.
The proposed agreement will put regulators’ willingness to approve big mergers in the Trump administration to the test once more. Concerns raised by the Federal Communications Commission (FCC) and the Department of Justice (DOJ) caused Comcast and Time Warner Cable (TWC) to shelve their proposed $45.2 billion merger ten years ago.
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