Cable television is dying, but it's nowhere near dead. Proof rests in Charter Communications' announced $56 million acquisition of Time Warner Cable, a deal which gives the combined company 30 percent ownership of the U.S. broadband market.
The deal values Time Warner at $195.71 per share - or $78.7 billion in cash and stocks - and far exceeds the $45.2 billion offer Comcast proposed last February. If successful, the merger would server 23.9 million customers across 41 states ranging from California to New York, making it the second-largest cable provider in the country.
"With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully-featured voice products, at highly competitive prices," Charter CEO Tom Rutledge said in a statement released Tuesday.
"In addition, we will drive greater competition through further deployment of new competitive facilities-based WiFi networks in public places, and the expansion of the facilities footprint of optical networks to serve the large, small and medium sized business service marketplaces."
Renamed New Charter, the new company also gains large clusters of Florida customers, thanks to a $10.4 million merger with Bright House Networks agreed to in March. The strenuous deal was Charter's response to a potential Comcast-TWC monopoly that would have given them control over half of all Internet subscriptions.
The proposal ran into numerous obstacles, mainly Federal Communication Commission regulatory concerns that Comcast-TWC would have too much power. Content and network providers - such as Hulu, YouTube, and Netflix - may have had significantly less control over contracts and internet connection deals.
Comcast had more incentive to raise consumer costs, including prices that determined Internet bandwidth. Such changes would directly affect a company like Netflix who would be forced to burden consumers with increased monthly fees.
New Charter might not necessarily hinder increased costs, especially since it combines the second and third largest Internet providers, but it does do more to level the playing field. That Time Warner and Charter don't compete in the same regions only reinforces Rutledge's message of an accelerated deployment, as it makes it easier to broker deals with programmers.
The only obstacle left in New Charter's way is FCC approval. Analysts say this merger will go through if only because of Comcast's influence on the marketplace. This, along with a pending merger between AT&T and DirecTV will only create more competition amongst newly formed companies.
"The FCC reviews every merger on its merits and determines whether it would be in the public interest," said Tom Wheeler, chairman of the FCC, in a statement. "The Commission will look to see how American consumers would benefit if the deal were to be approved."