The antitrust regulator in the United States had given green signal and cleared a proposal from Charter Communications to acquire the cable giant Time Warner Cable. The merger of two companies will create the second largest cable company in the United States.
The Department of Justice and the chairman of the Federal Communications Commission on Monday approved Charter Communications (CHTR) $78 billion takeover of Time Warner Cable (TWC). CHTR had also proposed to take-over the business of Bright House Networks for a value of $10.4 billion. Regulators had cleared this proposal too on Monday.
The regulators had attached several conditions to the approval for the acquisitions. Also, the final approval for the merger would be after a voting. However, such voting is a formal procedure as Chairman’s decision comes after consultation from other members. The acquisition will have implication on the cable business in the United States as it will change the business equations prevalent in the country so far. Charter will be in the second position after the Comcast. Voting is scheduled on May 12.
Once the merger is officially approved after voting, Charter will stand next to giant cable operators in the country such as AT&T, Verizon and Comcast. Charter will have a leading role to play in shaping the future of television-shows and web-content.
Time Warner Cable CEO Rob Marcus said that his company is pleased to reach this critical step in the regulatory review of their merger with Charter and remain optimistic that the transaction will be finalized soon. Charter’s CEO, Tom Rutledge said that his company was expecting the approval of the proposed merger by the end of last year, but the process took more time and Charter will run the enlarged company. Also he expressed his happiness that the Chairman Wheeler has submitted the proposed conditions for consideration by the full Commission and that the DOJ has submitted its agreement for approval by the court.
The acquisition was proposed almost a year ago, after Comcast’s proposal for a merger with Time Warner Cable fell apart amid stiff opposition from Washington. The same regulators were more supportive of Charter’s bid for Time Warner Cable with important conditions. Now Charter is eyeing a mid-to late-May completion date. Apart from the FCC vote, the company needs approval from the California’s Public Utilities Commission too.
As per the conditions put forward for the merger, Charter will be prohibited from putting data caps in place or charging customers based on usage. Additionally, Charter won’t be allowed to charge internet content providers fees for connecting them to customers. The conditions will apply for seven years to "focus on removing unfair barriers to video competition. Regulators think these conditions necessary in order to ensure maintenance of good business practices that are being followed in the Charter even after acquisition.