Charter Communications Acquisition of Time Warner Cable

Abstract

Charter Communications acquisition of Time Warner Cable and Bright House Networks created the second largest US broadband provider and third largest pay-TV provider. The combination of Charter, Time Warner Cable, and Bright House Networks had the capacity to serve over 25 million customers in approximately 41 states in the United States. The combined company was marketed under the brand name Spectrum. Time Warner had more than 14 million customers. Bright House served more than two million customers. This acquisition of Time Warner Cable and Bright House Networks made Charter the second largest home Internet provider in the United States. After the acquisition of Time Warner Cable, Charter became the second largest cable operator behind Comcast. The new company had 24 million subscribers which included 17.4 million video subscribers. The new company became the third largest pay-TV company which served more than 17 million video customers behind AT&T and Comcast. The deal valued Time Warner Cable at $78.7 billion. Charter provided $100 in cash and shares of the new public parent company (“New Charter”) which was equivalent to 0.5409 shares of Charter for each Time Warner share outstanding (Khatchatourian, 2016). Bright House was acquired for $10.4 billion. The deal increased the combined firms’ broadband network capacity which resulted in faster broadband speeds, better video products, and affordable phone service. The combination of Charter, Time Warner Cable, and Bright House created a leading broadband services and technology company which served about 23.9 million customers in 41 states. The revenues increased by approximately 43% in the post-merger year 2017. The cumulative returns for Charter Communications during the 251-day period surrounding the merger announcement (−5 day to +245 day) was 22.4%.