Comcast to Send Subs to Charter if TWC Deal Closes

News Analysis Dan Jones, Mobile Editor 4/28/2014

Cable operator Comcast says it will divest 3.9 million customers and help to make Charter the second largest cable operator in the US through subscriber transfers if its bid to buy Time Warner Cable closes. (See Comcast-TWC Deal: Playing All the Numbers.)

Comcast Corp. (Nasdaq: CMCSA, CMCSK) unveiled the three-stage deal Monday. If Comcast's $45.2 billion bid for Time Warner Cable Inc. (NYSE: TWC) is approved and closes, the cable companies expect to take the following steps:

Comcast will divest approximately 1.4 million existing Time Warner Cable customers directly to Charter Communications Inc. for cash. Charter plans to fund that expansion through debt. (See Comcast, Charter Talking Turkey? )

Comcast and Charter will exchange assets serving approximately 1.6 million existing Time Warner Cable customers and 1.6 million Charter customers.

Comcast is also creating and spinning off a new publicly traded cable provider to cater to about 2.5 million of its existing customers. Charter will form a new holding company will have a 33% stake in the Comcast spin-off. Comcast and former Time Warner Cable shareholders will own the remaining 67% of the new entity. (See What's Next for TWC.)

If this deal gets done, Charter will become the second-largest cable operator in the US. The deal would increase Charter's current residential and commercial video customer base from 4.4 million to approximately 5.7 million.

— Dan Jones, Mobile Editor, Light Reading