Charter to acquire Bright House in $10bn deal

BY Richard Summerfield

The consolidation of the pay television sector shows no signs of abating after Charter Communications Inc announced that it had agreed to acquire privately held cable operator Bright House Networks LLC in a deal worth around $10.4bn.

“Bright House Networks provides Charter with important operating, financial and tax benefits, as well as strategic flexibility,” said Charter’s chief executive Tom Rutledge, in a statement announcing the transaction. Once the deal has been completed the acquisition of Bright House will make Charter the second largest cable television provider in the US.

However, deal closure is contingent on a number of factors outside the control of the merging companies. In order for the deal to proceed, Comcast’s proposed $45bn acquisition of Time Warner Cable must win regulatory approval. Under the terms of that deal, Charter has agreed to pay approximately $7.3bn in cash for 1.4 million Time Warner Cable customers and to swap another 1.6 million customers with Comcast. However, if regulators block the Comcast/Time Warner deal, the agreement to sell subscribers to Charter would be in jeopardy, as would the planned Charter takeover of Bright House.

Should Charter’s acquisition of Bright House win regulatory approval, Charter will retain around 73.7 percent of the newly merged company, while Bright House’s owner, Advance Newhouse,  will hold the remaining stock. Advance Newhouse will receive around $2bn in cash and the rest in common and convertible preferred units of the new company.

The deal would revitalise Charter, which has suffered of late from consumers ‘cutting the cord’ and turning away from traditional cable television services and embracing streaming services provided by Netflix and Amazon Prime. Indeed, in 2014 pay television subscriptions in the US declined by around by 129,000.

News: Charter beefs up cable muscle with Bright House deal

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