With barely more than a week left on the FCC's merger review shot clock, the federal agency is reportedly close to issuing a draft order that would approve Charter's proposed $56 billion takeover of Time Warner Cable.
According to The Wall Street Journal, the Federal Communications Commission (FCC) plans to approve the Charter Communications Inc. takeover with a series of conditions, including a rule that would prohibit the cable company from restricting the ability of content partners to sell programming to online competitors. That issue -- the fear that large pay-TV operators have the power to block new online competition -- was a major sticking point in the FCC's review of Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s bid to take over Time Warner Cable last year. Comcast ultimately walked away from the TWC deal amid mounting regulatory concerns.
To recap on Charter, the nation's number-four cable operator signed a deal to acquire both Time Warner Cable Inc. (NYSE: TWC) and Bright House Networks last May. In addition to the $56 billion proposed deal for TWC, Charter agreed to pay more than $10 billion for Bright House. If the FCC approves the deal, Charter still has one more hurdle to clear. The state of California is expected to announce its verdict on the merger on May 12.
There are many implications to consider with Charter's proposed acquisition deals. But for those playing at home, here are five in particular to keep in mind.
1. With TWC and Bright House on board, Charter would serve around 20 million broadband subscribers, putting it just behind Comcast, which boasts roughly 23 million broadband subs.
2. Comcast has created a dominating pay-TV ecosystem with initiatives like its X1 platform and the birth of the RDK set-top software stack. A new and larger Charter would create a significant competitive force to the Comcast technology and business approach in the cable market.
3. New assets from TWC and Bright House would give Charter a major boost in the business services market. TWC's fiber deployments and connections to commercial buildings in particular would put Charter in line for new business services revenue. (See Charter Plans Business Services, Wireless Push .)
4. CEO Tom Rutledge successfully converted Charter systems to all-digital TV when he joined the company. He has said he expects to do the same for TWC customers, and that the project will be faster and cheaper on his second go-around. (See Charter Plots Post-Deal Future .)
5. Charter is notoriously tight-lipped with the press. There have been suggestions (off the record) that the situation could change in the near future with the company's new acquisitions tucked away. Greater transparency might be a requirement (officially or unofficially) given new Charter's relative size.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading