Charter Communications is buying Time Warner Cable for $55.33 billion, creating one of the largest TV and Internet providers in the U.S.
The deal comes a month after Comcast, the country's largest cable provider and owner of NBCUniversal, walked away from a $45.2 billion bid for Time Warner Cable after intense pressure from regulators. Time Warner Cable had chosen the Comcast deal and rejected a $38 billion hostile offer from Charter in early 2014.
There has been a wave in consolidation in the cable industry as providers are lose TV subscribers, costs for TV, sports and movies rise and pressure from online video services such as Netflix and Hulu increases.
John Malone's Liberty Broadcast Corp., which owns more than a quarter of Charter's stock, is backing the acquisition, which gives the cable pioneer a jewel he has pursued for years and puts Charter in the same league as Comcast.
Time Warner Cable is the country's No. 2 cable company and serves large markets in Los Angeles and New York.
Charter on Tuesday also said it would buy Bright House Networks, a smaller cable provider, for $10.4 billion.
"The teams at Charter, Time Warner Cable and Bright House Networks are filled with the innovators of our industry," Tom Rutledge, President and CEO of Charter Communications, said in a joint statement announcing the deal. "Representatives of each of these companies have invented some of the most revolutionary communications products ever created; innovations like video on demand, VOIP phone service, remote storage DVR, cable TV through an app, downloadable security and the first backward-compatible, cloud-based user interface. That spirit of innovation will live on, and it will create real benefits and great long-term value for the customers, shareholders and employees of all three companies."
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. 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 services marketplace, " he continued. "New Charter will capitalize on technology to create and maintain a more effective and efficient service model. Put simply, the scale of New Charter, along with the combined talents we can bring to bear, position us to deliver a communications future that will unleash the full power of the two-way, interactive cable network."
Charter, combined with Time Warner Cable and Bright House, will have nearly 24 million customers, compared with Comcast's 27.2 million. AT&T's pending deal with DirecTV would give it 26.4 million TV customers and 16.1 million Internet customers.
Liberty Broadband is expected to own about 20 percent of the new Charter.
Charter Communications Inc., based in Stamford, Connecticut, will provide $100 in cash and shares of a new public parent company equal to 0.5409 shares of Charter for each outstanding Time Warner Cable Inc. share. The transaction values each Time Warner Cable share at about $195.71.
The companies on Tuesday valued New York-based Time Warner Cable at a total of $78.7 billion, including debt.