Comcast and Charter near $20bn cable deal
Comcast and Charter Communications are close to agreeing an intricate deal that would reshape the US pay-TV market and draw a line under a lengthy power-struggle at the top of the cable industry. The transaction, which has a total value of about $20bn, is contingent on Comcast being granted regulatory approval for its proposed takeover of Time Warner Cable, the country’s third largest cable company with about 12m subscribers. The three-part deal, which could be announced as early as next week, involves Comcast, the US’ largest cable operator, divesting 3.9m subscribers, or about 18 per cent of its 22m subscriber network, according to people familiar with the matter. First, Comcast would sell Charter about 1.4m subscribers from TWC’s network; it would also place 2.5m subscribers in a new company in which Charter will own a roughly 35 per cent stake. Finally, Charter and Comcast would swap about 1.65m subscribers. It is unclear exactly which subscribers will be swapped or the exact geographies under discussion. The swap would be one of the largest ever in the US cable industry. The FT previously reported that discussions were ongoing over a deal. If the three-part deal is agreed, it would mark a victory of sorts for Charter, the company backed by cable industry veteran John Malone, which was thwarted in its attempt to buy TWC in February after Comcast’s bid emerged. A combined Comcast-TWC would supply up to 40 per cent of US households with high-speed internet access. In a gambit designed to mitigate an immediate backlash from regulators, Comcast said it was prepared to shed 3m subscribers at the time of announcing the deal. The all-share deal has fallen in value since it was announced from $45.2bn, or $158.82 a share, as Comcast’s stock price has declined. At the time of the deal, relations between Comcast and Charter were said by people close to the companies to be severely impaired. Charter had pursued its $132.50 per share bid for TWC on its belief that Comcast had ruled itself out of the running. Comcast executives made contact with their Charter peers in the days after the company made its offer public, but the talks over the subscription sales only started recently, according to people familiar with the matter. Comcast and Charter declined to comment.