In a big move the FCC looks like it is approving the Charter Communications, Inc. (CHTR) and Time Warner Cable Inc (TWC). But questions remain as to the motive behind the move. A Saga coming to an end: Charter’s deal to acquire TWC/BHN appears to be in the final stages of approval at the Federal level based on the comments from both the Department of Justice and the FCC. The approval will result in a multi-year effort M&A cycle in the cable industry drawing to a close with 80% of US consumers now serviced by the top 4 MVPD, note analysts at Barclas.
From Charter’s perspective, the focus will now move to the likely impact of the deal approval conditions and execution. Based on DOJ’s filing and the FCC Commissioner’s statement, the overwhelming focus, as expected, is on broadband regulation and preserving completion from the OTT players. The key focus at the DOJ appears to be the ability of OTT platforms to (a) reach consumers over the internet and (b) be able to obtain programming unconstrained by MVPD contract limitations. Here is our preliminary read of the conditions revealed thus far.
As noted investor and tweeter Mario Gabelli asked (somewhat cryptically):
cable ….regulatory approvals for change of control for two cable cos.in NYC in progress? …..tail or tale ….politics in process …or
— Mario Gabelli (@MarioGabelli) April 25, 2016
A statement from the FCC Chariman notes:
“Based on imposed conditions that will ensure a competitive video marketplace and increase broadband deployment, an order recommending that the Charter/Time Warner Cable/Bright House Networks transaction be approved has circulated to the Commissioners. As proposed, the order outlines a number of conditions in place for seven years that will directly benefit consumers by bringing and protecting competition to the video marketplace and increasing broadband deployment. If the conditions are approved by my colleagues, an additional two million customer locations will have access to a high-speed connection. At least one million of those connections will be in competition with another high-speed broadband provider in the market served, bringing innovation and new choices for consumers, and demonstrate the viability of one broadband provider overbuilding another.
See the full statement from the FCC here