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Charter Snatches Bright House

Mari Silbey
3/31/2015

Charter is ready to make it official. Only weeks after rumors of a deal first leaked, Charter, the fourth-largest US cable company, announced today that it intends to acquire Bright House Networks , the sixth-largest US MSO, for $10.4 billion cash and stock. (See Why Charter Fancies Bright House .)

There is one major caveat, however. Charter Communications Inc. 's acquisition will only take place if and when the federal government approves Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed $45 billion buyout of Time Warner Cable Inc. (NYSE: TWC). If that much larger deal doesn't go through, then Charter and Bright Hose may or may not negotiate a new pact. (See Comcast Says TWC Deal Will Close Later.)

If everything goes as expected, Charter will add the Bright House assets to its new footprint, which will already include additional systems from Time Warner Cable as part of that company's divestiture plan. In total, Charter would then claim 7.6 million subscribers of its own.

But wait, there's more! Through its three-part transaction with Comcast and Time Warner Cable, Charter expects to operate a new cable entity known as GreatLand Connections. The GreatLand system will include an additional 2.5 million subscribers, pushing the total number of subs owned and/or managed by Charter to 10.1 million, making it almost as large as TWC is now.

Charter and its financial backer, cable kingmaker John Malone, have made no secret of their goal to expand the cable company as much as possible. After Charter lost out on its hostile bid to buy Time Warner Cable last year, Charter was quick to create its own silver lining with a deal to take over TWC's leftovers and to form the new GreatLand company. With the addition of Bright House, Charter would inch itself closer to Comcast's planned footprint of 30 million pay-TV subscribers.

Meanwhile, life will only get harder for smaller regional cable companies as the market continues to consolidate. Part of the reason Bright House is likely interested in a deal with Charter is because it will lose some of its buying power if Time Warner Cable is subsumed by Comcast. Currently, Bright House negotiates programming rights at discounted rates through a partnership with TWC. Left on its own, the smaller cable company would likely see its licensing fees skyrocket.

— Mari Silbey, special to Light Reading

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MordyK
MordyK
4/5/2015 | 3:52:06 AM
Consolidation
I'm surprised none of the majors made a play for Cablevision yet...
thebulk
thebulk
3/31/2015 | 9:54:38 PM
Re: Soapy
@Mitch, No one could have said it better!
thebulk
thebulk
3/31/2015 | 9:54:08 PM
Re: Don't understand
I think they idea here is to get them on the HSI teet so they can pay premium for the pipe to that streaming service.
jbtombes
jbtombes
3/31/2015 | 8:46:25 PM
BHN's future
BHN has been a kind of overachieving younger brother (or sister) to TWC, racking up great customer service metrics, trying - and succeeding - with things like EPON, pushing the envelope on WiFi. If (all) these deals go through, it will be interesting to see whether the Bright House systems retain some of their status as innovative outliers.
Mitch Wagner
Mitch Wagner
3/31/2015 | 4:42:13 PM
Soapy
Charter will buy Bright House but only if Comcast buys TWC? This is like junior high school romance. 
danielcawrey
danielcawrey
3/31/2015 | 2:34:37 PM
Don't understand
I just don't get this rush to obtain new cable subscribers. Aren't the numbers going down across the board? How many more subscribers can these companies acquire when people increasingly move towards streaming services? I'm not sure I understand this move. 
thebulk
thebulk
3/31/2015 | 2:31:01 PM
Full turn around
It wasnt that many years ago (or was it) when Charter was on the brink of vanishing from the known universe, now they are on a rampage that would make Genghis Khan jealous. My, how things change. 
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