Comcast to acquire Fort Worth cable market from Charter in swap deal
04/28/2014 10:49 AM
04/28/2014 9:43 PM
Comcast Corp. is set to become the major cable company in North Texas after a new set of deals reached with Charter Communications.
The Philadelphia-based company unveiled a series of transactions with Charter on Monday, including a systems swap that will transfer the Fort Worth cable market from Charter to Comcast. The deals are designed to clear the way for regulatory approval of Comcast’s $45 billion acquisition of Time Warner Cable announced in February.
In all, Comcast is selling cable systems with 1.4 million subscribers to Charter and spinning off an additional 2.5 million subscribers into a new publicly-traded cable provider that Philadelphia-based Comcast is creating. The divestiture, valued at $19.5 billion, is 900,000 more TV subscribers than Comcast originally agreed to shed to obtain regulatory approvals.
As part of the deal, Charter systems in Fort Worth, Keller, Weatherford, Denton and Cleburne will be swapped to Comcast. That will add to the thousands of North Texas households that Comcast will acquire with Time Warner Cable, which serves communities including Arlington, Bedford, Colleyville, Dallas, Dalworthington Gardens, Euless, Grand Prairie and Grapevine.
Comcast said that the transactions will give it less than 30 percent of homes that subscribe to cable or satellite TV in the U.S. after its combination with Time Warner Cable closes.
U.S. senators on the Judiciary Committee seemed skeptical during a recent public hearing in Washington about the potential consumer benefits of a transaction that combines the No. 1 and No. 2 cable operators. Sen. Al Franken, D-Minn., said he is against it, and Comcast officials acknowledged that the deal won’t lower cable bills or even slow cable-TV rate increases.
The Federal Communications Commission and the U.S. Justice Department’s antitrust division are evaluating the proposed merger. Most observers believe the agencies will approve it, with conditions. Now federal regulators will simultaneously evaluate the proposed divestitures that carve up Time Warner Cable among Comcast, Charter and a new company, and will involve separate voluminous government filings.
Brian Roberts, Comcast’s chief executive officer and chairman, said Monday the deals would leave the company at the subscriber levels of 2002 and 2006 when Comcast acquired, respectively, AT&T’s broadband and parts of Adelphia Communications.
“Transforming three giant companies into two behemoths gives no comfort to content providers or consumers,” Matt Wood, policy director of the nonprofit Free Press, said Monday. “Lawmakers and antitrust authorities shouldn’t be fooled either.”
Charter said the acquisition of the Time Warner Cable subscribers will boost its residential and commercial video customer base to about 5.7 million from 4.4 million. Charter and Comcast will also exchange about 1.6 million customers.
Charter estimates that the acquisition of the cable systems will cost approximately $7.3 billion. It estimates the value of the spinoff company at about $14.3 billion.
Charter President and CEO Thomas Rutledge said during a conference call that the transactions will help broaden Charter’s footprint in the Midwest and Southeast. The Stamford, Conn., company will acquire systems in Ohio, Kentucky, Wisconsin, Indiana and Alabama. It will also shed systems in California, New England, Tennessee, Georgia, North Carolina, Texas, Oregon, Washington and Virginia.
Rutledge said the new footprint will give Charter access to significantly underpenetrated areas and also will be easier to operate.
The spinoff company Comcast is creating will own systems adjacent to Charter systems in Michigan, Minnesota, Indiana, Alabama, Eastern Tennessee, Kentucky and Wisconsin.
Both Comcast and Charter’s boards have approved the transactions, which are subject to Comcast’s deal with Time Warner Cable closing, approval by Charter shareholders and other conditions. Time Warner Cable’s board has also signed off on the deal.
Comcast plans to use proceeds from the transactions to lower its debt. It still anticipates its combination with Time Warner Cable bringing about $1.5 billion in operating savings. The combination is targeted to close by year-end.
Both Comcast and Time Warner stock prices increased on Monday. Comcast closed at $51.70, up 1.4 percent. Time Warner closed at $140.95, an increase of 1.1 percent.
This article includes material from Star-Telegram archives.
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