Contrary to a report earlier this month, negotiations are continuing in Charter's bid to acquire Bright House Networks for $10.4 billion. (See US Pay-TV M&A Plot Thickens.)
The two companies jointly announced that they "remain committed to completing their previously announced transaction on the same economic and governance terms."
The agreement between Charter Communications Inc. and Bright House Networks was initially contingent on Comcast Corp. (Nasdaq: CMCSA, CMCSK) successfully acquiring Time Warner Cable Inc. (NYSE: TWC). When that deal failed, Charter and Bright House had a 30-day window during which to decide whether or not to continue with their own merger. With their most recent announcement, the two cable operators said that they have extended their "good faith negotiating period" by 30 days.
Bright House currently has an arrangement with Time Warner Cable that allows the smaller operator to share technology and negotiate discounted programming rates through TWC. Had Comcast succeeded in buying Time Warner Cable, however, Bright House would have lost its favored partner status. In that scenario, the agreement with Charter was seen as a necessary step to remaining competitive.
In the wake of Comcast's merger collapse, it's unclear what path makes the most sense for Bright House. Initially Reuters reported that the company wanted to stay independent and maintain its relationship with Time Warner Cable. However, Charter and Bright House have now made it clear that their discussions are ongoing. Further complicating matters is the fact that Charter is known to be pursuing an acquisition of Time Warner Cable alongside its bid to buy Bright House. (See Bright House May Be Kingmaker.)
Details are scarce on how the parallel transactions might play out, but Charter is already lining up capital in the hopes of achieving its M&A goals.
Regarding the potential Bright House deal, Charter President and CEO Tom Rutledge said, "Bright House and its employees have created a high quality service operation, and the addition of Bright House brings additional scale and strategic flexibility to Charter over time. We look forward to completing the transaction as planned, and our teams are working together to make that happen."
Bright House CEO Steven Miron added, "We continue to be excited about the transaction with Charter. We believe this combination positions the new company to become an industry consolidator and growth platform to develop innovative products in serving customers, growing market share and creating value for shareholders."
— Mari Silbey, Senior Editor, Cable/Video, Light Reading