It’s official: Charter Communications has accomplished what Comcast set out to do last year, but was barred from completing: The company has acquired Time Warner Cable (TWC)—along with the smaller Brighthouse Networks—in a purchase that will exceed $71 billion.
The acquisition was a landmark announcement, as Charter Communications cemented its position as the third largest multichannel video-programming distributor (MVPD) in the U.S., trailing only AT&T and Comcast, respectively, in terms of subscribers. Charter will also become the second-largest broadband provider in the U.S.
As is to be expected, a merger of this size is causing quite a stir in the cable industry. The acquisition was initially objected to by the American Cable Association (ACA), which represents small cable operators, but ultimately it was allowed following recent approvals by the Federal Communications Commission and the U.S. Department of Justice; the latter declared that the acquisition did not violate any antitrust laws.
Now, everyone wants to know how the mega-deal will impact the cable industry as a whole.
Here’s some good news: Charter CEO Tom Rutledge recently sent a reassuring message for smaller competitors, when he announced that Charter has no plans to overbuild cable operators. Instead, Charter will focus its overbuild efforts on telecommunications providers.
“When I talked to the FCC, I said I can’t overbuild another cable company, because then I could never buy it, because you always block those,” Rutledge stated at a recent event. “It’s really about overbuilding telephone companies.”
One of the conditions imposed by the FCC calls for Charter to overbuild 2 million homes located outside its footprint, over a five-year period. At least 1 million passings will be against competing Internet service providers. What’s more, Charter can legally obtain up to a quarter of a million cable customers in areas that are not interconnected.
Also, of note is the fact that Charter will be barred from implementing data caps on Internet customers for at least seven years. Charter customers can therefore continue streaming large amounts of video without having to worry about paying additional monthly fees. This could prove to be significant, as many other providers will be moving towards residential data caps over the next few years. This could prove to be a tremendous boost to Charter, if data caps continue to be rolled out.
In light of these conditions, you as a small operator can rest assured that Charter’s announcement shouldn’t have much of an impact on your bottom line, at least in the short term.
Moving forward, though, it will be important to note how Charter’s newly acquired customers will respond to the acquisition, which will ultimately impact 25 million customers across 41 different states. Will they stay on board with Charter, or will the acquisition edge them closer to cutting their cords? Only time will tell, as it’s too early in the process to gauge consumer feedback.