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Time Warner Cable to be bought by Charter Communications Time Warner Cable to be bought by Charter Communications
(about 1 hour later)
Charter Communications has agreed to buy media giant Time Warner Cable in a cash and shares deal worth $78.7bn (£52bn). Charter Communications has agreed to buy media giant Time Warner Cable in a deal which values the company at $78.7bn (£52bn).
The cash element is worth $55bn, with the rest covered by Charter shares. The proposed deal would combine the second and third largest cable operators in the US.
The new company, which will also include Bright House networks, will be a broadband services and technology company serving 23.9 million customers in 41 states. Charter is also buying Bright House Networks, another cable operator, for $10.4bn.
It aims to compete with US cable market leader Comcast. The combined firm will be a broadband services and technology company serving 23.9 million customers in 41 states.
Comcast, which has 27 million customers, owns NBCUniversal. US cable companies are facing stiff competition from online service providers like Amazon and Netflix, as users increasingly choose to stream content over the internet at a time of their choosing.
The deal comes a month after Comcast abandoned a plan to buy Time Warner Cable after heavy pressure from regulators. Cable companies are responding by trying to cut costs and improve their offering.
US cable and internet companies are facing stiff competitive pressure and are trying to cut costs and attract new customers as users increasingly choose to stream viewing content on the internet at a time of their choosing. The new merged cable giant will compete with US cable market leader Comcast, which currently has about 27 million customers.
Liberty Broadband is expected to own about 20% of the new company. Charter's takeover move comes a month after Comcast abandoned its plan to buy Time Warner Cable after heavy pressure from regulators.
The deal values Time Warner Cable shares at $195.71. The latest deal is also likely to come under regulatory scrutiny, and the Federal Communications Commission (FCC) quickly issued a statement.
In pre-market trading, Time Warner Cable's shares were up 11% at $190.5, while Charter Communications was up 3.2% at $181. "The FCC reviews every merger on its merits and determines whether it would be in the public interest," FCC chairman Tom Wheeler said.
"In applying the public interest test, an absence of harm is not sufficient. The commission will look to see how American consumers would benefit if the deal were to be approved."
Liberty Broadband, which currently owns about a quarter of Charter, is expected to own about 20% of the new company.
The deal values Time Warner Cable at $195.71 per share.