This article was published 9 years ago
Commentary

Regulators will approve Charter’s bid to acquire Time Warner Cable

Brighthouse cable techician Charter merger
A technician from Brighthouse networks repairs cable. Charter has agreed to acquire Time Warner Cable and Brighthouse networks. – Image credit: Flickr / Rusty Clark

Now that Comcast has abandoned plans to acquire Time Warner Cable, all eyes have shifted to Charter Communications. The Wall Street Journal is reporting that the company has already began plans to try again with an acquisition of TWC, which TWC rejected in favor of Comcast. If both companies agree with a merger, Federal regulators will approve this merger.

One reason a Charter/TWC merger will get approved is where Charter operates. They only serves 9.2% of the country – with St. Louis, Mo; Ft. Worth, Tex. and Madison, Wis. as their biggest markets. Charter mostly operates in suburbs of major population centers. A good example is New Orleans, which is a Cox communication territory. Charter operates in three of the fastest-growing parishes in the state – St. Tammany, Tangipahoa and Livingston parishes.

Using data provided by broadbandmaps.gov, a combined Charter (9.6%)/TWC (21.2%) would control 30% of the nation’s broadband market. For clarity, Comcast control 34.9%. It should be noted that the data is not based on new guidelines from the FCC on what constitutes broadband Internet (25 Mbps down/3Mbps up). The new company would operate in three of top ten TV market – New York, Los Angeles and Dallas/Ft. Worth – while the rest would be under Comcast.

This is all based on if the two companies agree to merger, something the WSJ report stated could be a factor in negotiations:

People close to Charter acknowledged that they will have to come up with a better offer than what they presented to Time Warner Cable more than a year ago, given that Time Warner Cable’s operations have improved and both companies’ stock prices have climbed. Charter is unlikely to make a hostile bid, one of the people said.

If Charter buys TWC, the FCC and the DOJ will approve the merger. Since Charter is a small company, it will grow to become the second-biggest ISP in the country, behind Comcast. Regulators didn’t like the Comcast/TWC merger because it would become a gigantic corporation (30 – 60 – 80% control of the broadband market – depending on whom you ask). A Charter/TWC merger would be just the right size for a merger to be approved.

And regulators like a small company becoming big, not a big corporation becoming gigantic.