The merged Charter Communications, Time Warner Cable (TWC) and Bright House Networks would offer consumers faster, cheaper broadband and adhere to new net neutrality rules whether or not they are upheld in court, John Malone’s Charter has…
The merged Charter Communications, Time Warner Cable (TWC) and Bright House Networks would offer consumers faster, cheaper broadband and adhere to new net neutrality rules whether or not they are upheld in court, John Malone’s Charter has contended.
In an FCC filing outlining why it believes the merger would be in the public interest, Connecticut-based Charter said the merged company, New Charter, would make “significant” investments in its broadband network and ensure all customers get minimum broadband speeds of 60 mbps. Pricing would be based on Charter’s current model, which is cheaper than those of both TWC and Bright House. Broadband would be offered on a standalone basis as well as in bundled packages.
New Charter, which would be the country’s second-largest cableco behind Comcast, would also commit to “a free and open internet” and, in line with the FCC’s new net neutrality rules, refrain from blocking and throttling traffic and engaging in paid prioritisation. The FCC’s 2015 Open Internet Order came into effect on 12 June, but incumbent AT&T and trade groups have filed a lawsuits against it, claiming the FCC exceeded its powers in introducing the new rules.
Charter said the merged company would “go farther” than the FCC order by agreeing not to impose data caps or usage-based billing.
The cableco also argued that New Charter, with its expanded footprint, would be able to compete better with large telcos for enterprise customers and advertising services, boosting competition in these sectors.
Charter stressed that the transaction presents no ‘horizontal concerns’ as the merging parties don’t compete in the same geographic markets.
“Moreover, New Charter will add a substantial presence in only three designated market areas where TWC or Bright House do not already have a presence (Boston, Atlanta, Minneapolis), and in each, Comcast will remain by far the biggest player,” the company said.
Charter also contended that New Charter would have no incentive to harm online video distributors, programmers and multichannel video programming distributors (MVPDs), noting that its broadband business is more critical to its success than its video business. Charter and Bright House have no broadcast or cable interests outside local news, sports and public affairs programmes and TWC owns only local channels and a few regional sports networks, meaning New Charter will have no reason to disadvantage other programmers to protect its own interests, Charter said.
Analysts are generally optimistic that the merger, which will see Charter pay US$56bn for TWC and US$10.4bn for Bright House, will be cleared by federal regulators with conditions. The general consensus is that it does not present the same risk to public interest as the failed Comcast-TWC merger, which both the FCC and Department of Justice opposed.
New Street Resarch analyst Jonathan Chaplin said Charter’s public interest statement increases his team’s conviction that the deal will be cleared before the end of Q1 2016.
“We put the odds of deal approval at 80-85%,” he said.
Charter and TWC have said they aim to close the deal by the end of this year.
