Time Warner Cable subscribers in southwest Ohio ultimately will become Charter Communications customers as part of a series of transactions announced Monday by Comcast.
The transactions are designed to lower Comcast’s debt and help clear the way for its acquisition of Time Warner Cable, including the sale of cable systems with 1.4 million subscribers to Charter and the spinoff of an additional 2.5 million subscribers into a new company.
The deal is contingent on regulatory approval of Comcast’s proposed merger with Time Warner Cable, company officials said. The approximately 2.5 million subscribers will be part of a new publicly traded cable provider that Philadelphia-based Comcast is creating and spinning off.
In Ohio, all of Time Warner Cable’s operations will go to Charter, including Dayton, Springfield, Cincinnati and Cleveland, company officials said. The process for the divestment of those and other Time Warner markets in Ohio has not yet been determined.
“This announcement is a win-win-win and moves us one step closer to completing our merger with Comcast,” said Mike Pedelty, a Time Warner Cable spokesman. “We’re pleased that the parties have reached agreement and look forward to working with Comcast and Charter to make all of the transactions as seamless as possible for our employees and our customers.”
Charter Communications Inc. will become the nation’s second-largest cable provider through the deal with Comcast, said Alex Dudley, a Charter spokesman. Currently, the Stamford, Conn.-based company ranks fourth among U.S. cable providers, with 4.4 million video customers in 29 states.
Dudley said Charter is transitioning to an all-digital platform through 2014 to provide customers with increased Internet speeds, more high-definition channels and the most video on-demand content available in its markets. The company offers three video packages, as opposed to “hundreds of them,” he said.
“We very much believe that we can be a good cable company by providing a clear package with a high value of services in a no-nonsense format,” Dudley said.
Time Warner Cable is southwest Ohio’s largest cable provider and employs 1,900 workers in the region.
Charter had revenue of $8.4 billion in 2013, a 5 percent increase over the previous year, according to company documents. The company has more than 21,000 employees.
Charter will form a new holding company that will own about a third of the Comcast spinoff, while shareholders of Comcast and the former Time Warner Cable will own the remaining 67 percent of the new company.
In February Comcast Corp.’s $45.2 billion bid for Time Warner Cable Inc. topped Charter’s offer.
Comcast said that the transactions will give it less than 30 percent of homes that subscribe to cable or satellite TV in the U.S. after its combination with Time Warner Cable closes.
Comcast said in an investor presentation that it puts the deals’ initial value to Comcast shareholders at $19.5 billion.
Charter said the acquisition of the Time Warner Cable subscribers will boost its residential and commercial video customer base to about 5.7 million from 4.4 million. Charter and Comcast will also exchange about 1.6 million customers.
Charter estimates that the acquisition of the cable systems will cost approximately $7.3 billion. It estimates the value of the spinoff company at about $14.3 billion.
Charter President and CEO Thomas Rutledge said during a conference call that the transactions will help broaden Charter’s footprint in the Midwest and Southeast. The company will acquire systems in Ohio, Kentucky, Wisconsin, Indiana and Alabama. It will also shed systems in California, New England, Tennessee, Georgia, North Carolina, Texas, Oregon, Washington and Virginia.
Rutledge said the new footprint will give Charter access to significantly underpenetrated areas and also will be easier to operate.
What you should know about the deal?
• Charter Communications will acquire about 1.4 million subscribers previously served by Time Warner Cable.
• The deal will increase Charter’s cable subscribers to 5.7 million, making it the second-largest cable provider in the U.S.
• The deal will include all Time Warner Cable operations in Ohio. Time Warner employs 1,900 workers in southwest Ohio.
• Charter is transitioning to an all-digital platform through 2014 to provide customers with increased Internet speeds, more high-definition channels and video on-demand content.
• Shares of Charter Communications jumped $10.04, or 7.7 percent to close at $140.05. Comcast stock was up 73 cents, or 1.4 percent, to $51.70, while Time Warner Cable gained $1.54, or 1.1 percent, to $140.95.