Charter-Time Warner Cable Tie-up Gets DOJ Approval

Charter-Time Warner Cable Tie-up Gets DOJ Approval

Charter-Time Warner Cable Tie-up Gets DOJ Approval

$CHTR, $TWC

The FCC still must approve the acquisition, Chairman Tom Wheeler signaled his support Monday.

Monday, the US Justice Department (DOJ) approved the planned acquisition of both Time Warner Cable (NYSE:TWC) and Bright House Networks by Charter Communications (NASDAQ:CHTR), the tie-up still needs FCC approval.

Shortly after the DOJ approval FCC chairman Tom Wheeler issued a recommendation that the 5-member body also approve the deal, though with some conditions of its own, including some that presumably favor Amazon.com (NASDAQ:AMZN), Hulu, Netflix (NASDAQ:NFLX) and others.

“First, New Charter will not be permitted to charge usage-based prices or impose data caps,” said Mr. Wheeler. “Second, New Charter will be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of internet traffic to broadband customers.”

A 3rd condition of approval “outlaws video programming terms that could harm” any service that distributes video over the internet and protects them from “retaliation.”

Each of those 3 conditions are for 7 years.

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After the Justice Department and FCC issued their statements Monday, shares of Charter rose 5%, shares of TW Cable rose 4%. Bright House is not a publicly traded company.

Charter, in which John Malone’s Liberty Media owns a big stake, came in with a deal for TW Cable last year after Comcast (NASDAQ:CMCSA) abandoned its bid for the company due to regulatory opposition. The cash-and-stock deal had a price tag of around $55-B. Including debt, the deal at the time was valued at $78.7-B.

The National Association of Broadcasters and Dish Network (NASDAQ:DISH) had urged the FCC to reject the proposed combination. Opposition to the Charter deal has been less prevalent.

While the tie-up will result in a bigger company that commands about 15% of the nation’s cable and satellite TV subscribers and 22% of its broadband subscribers, Charter had in an FCC filing emphasized its commitment to the principles of Net Neutrality.

HeffX-LTN Analysis for CHTR:  Overall Short Intermediate Long
Neutral (0.15) Neutral (-0.05) Neutral (-0.07) Very Bullish (0.58)
HeffX-LTN Analysis for TWC: Overall Short Intermediate Long
Neutral (0.20) Neutral (0.15) Neutral (0.01) Bullish (0.46)

Stay tuned…

Paul Ebeling

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