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Charter finalizes Time Warner purchase: Is era of 'mega cable' here?

The deal, which was finalized Wednesday, came with several conditions set by regulators to prevent the company from blocking access to streaming video services.

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    A Charter Communications van parked in St. Louis. Charter said Wednesday that it had completed its acquisition of Time Warner Cable, a move that some advocates predicted could usher in an era of "mega cable" giants.
    Jeff Roberson/AP/File
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Charter Communications said it has completed its acquisition of Time Warner Cable and Bright House Networks on Wednesday.

The merger, which makes the company the second-largest broadband provider and third-largest Pay-TV service, had raised fears for some advocacy groups about a looming era of "mega cable" giants.

With the company growing from 6.8 million customers to more than 25 million across 41 states, they argued, the new conglomerate would undermine streaming video services and curb independent programming while also raising prices for consumers.

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In response, federal regulators imposed a variety of conditions on the deal earlier this month.

Charter, which valued its deal for Time Warner at $56.7 billion, excluding debt, and the purchase of Bright House at $10.4 billion, argued it would instead improve competition.

The deals "will drive investment into the combined entity's advanced broadband network, resulting in faster broadband speeds, better video products, more affordable phone service and more competition, for consumers and businesses," the company said in a statement.

The acquisitions gained final approvals from the Federal Communications Commission on May 6 and from regulators in California last week, nearly a year after the transaction was announced.

The Justice Department also gave its blessing last month, saying that regulators had been able to negotiate a compromise that avoided potential anti-trust concerns. The conditions of the merger prevent Charter "from using its leverage over programmers to harm competition," the department said.

The company faces a series of conditions as a result. The limits, which are valid for seven years, are especially aimed at stopping it from attempting to shut out online video sites, ArsTechnica reports. They also offer some solace for consumers.

For one, the company can't impose data caps or pricing that's dependent on how much users watch.

Within five years, Charter must provide broadband with a download speed of at least 60 megabits per second to an additional 2 million customer locations. One million of these customers have to be in an area where the company is facing competition from another broadband provider.

It also can't charge fees to streaming providers such as Netflix to set up "interconnection agreements" to use its broadband network. That practice can be controversial and led to a long-running impasse between Netflix and Comcast in 2014.

Charter also won't be able to enforce clauses in its contracts with programmers that bar the programmers from making video available to online services.

The completion of the deal marks the end of a long-running quest for Charter, which had pursued Time Warner Cable beginning in 2013, Reuters reports.

Time Warner rejected the company's offers and instead began a process to merge with Comcast, the nation's largest cable provider. But after pressure from regulators, Comcast ultimately abandoned the deal in February 2015.

The new company is also embarking on a rebranding effort of sorts, shedding its ties to the name "Time Warner Cable," which has been particularly singled out by consumers as having poor customer service.

"While Time Warner Cable and Bright House Networks customers will not see any immediate change, the company will be called Charter and the products and services will be marketed under the 'Spectrum' brand," spokesman Alex Dudley told Bloomberg.

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