Charter has kicked off the summer season by finally getting the answer it has been seeking for some time now. Time Warner Cable has agreed this morning to be purchased for $56.7B in cash and stock, a sum which values the larger company at $78.7B. They also reaffirmed their separate deal with Bright House Networks.
The combined company will apparently be rebranded as "New Charter", and will have some 24M subscribers once both deals are done. That's still #2 to Comcast of course among cable MSOs in the USA, but quadruples the company's current size and fulfills the ambitions of John Malone, its billionaire cable protagonist.
Most of the focus will of course be placed on the consumer side, at least in the media. But as with the failed Comcast deal before it, this merger would if completed assemble a pretty formidable enterprise/business networking operator as well. TWC and Charter have both been finding substantial success in that space, with annualized growth rates north of 20%.
One question yet to be resolved is the eventual fate of TWC's Navisite cloud business. Will Charter use it as a nucleus for a further expansion into cloud services, or spin it off to keep the focus on networks and consumer video? We shall see.
Another question is whether the French operator Altice will try to trump the deal, look for other targets, or just be happy with Suddenlink for now. They had surfaced as a possible TWC suitor, and might have forced Charter's hand. But this time there is a breakup fee of $2B attached to the deal, so it may be harder to play spoiler.
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