Charter Communications, Inc. (CHTR) Shells out $10.4 Billion For Cable Operator Bright House

Charter Communications, Inc. (NASDAQ:CHTR) has a reached a definitive agreement to acquire Bright House for $10.4 billion, as the wave of consolidation in the media industry takes shape. The acquisition of the sixth largest cable operator in the U.S should result in the creation of the second largest cable company in the country, just behind Comcast Corporation (NASDAQ:CMCSA).

Terms of the Deal

Under the terms of the agreement Advance/Newhouse, the parent of Bright House, will own a 26.3% stake in the new company, with Charter taking the remaining 73.7%. Charter Communications, Inc. (NASDAQ:CHTR) is to pay Advance/Newhouse $5.9 billion in common stock, $2.5 billion in convertible preferred shares and $2 billion in cash.

The acquisition of Bright House comes as Comcast continues to wait anxiously to see whether the FCC will approve its proposed merger with Time Warner Cable Inc (NYSE:TWC).

AT&T Inc. (NYSE:T) is also waiting to see whether its merger with DirecTV will be approved, as companies push to consolidate their positions amidst growing competition from streaming services offered by the likes of Netflix, Inc. (NASDAQ:NFLX).

Subscribers Acquisition

The deal is somehow dependent on the Comcast-Time Warner deal, Charter having signed a subscriber acquisition deal with Comcast Corporation. Charter Communications, Inc. (NASDAQ:CHTR) is to acquire 1.4 million subscribers from Comcast for $7.3 billion in cash. Once the Bright House deal is closed, Charter’s biggest shareholder, Liberty Broadband Corp. is to acquire $700 million in issued shares of the new company.

The transaction is still subject to approval by Charter’s shareholders, as well as the expiration of Time Warner Cable Inc (NYSE:TWC)’s right of first offer. The board of directors of the new company will include 12 members, made of three directors appointed by Advance/Newhouse, as well as three directors appointed by Liberty Broadband Corp (NASDAQ:LBRDA).

The wave of acquisitions in the media space comes at a time of growing fear that television groups will eventually force smaller cable companies to pay steep prices for programming costs, which may make it difficult for smaller cable companies to fight back.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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