Charter Communications announces it's buying Time Warner for $55 billion

  • Charter, the fourth-biggest U.S. cable company, will pay $195.71 per share with $100 in cash and the rest with its own stock
  • The deal creates a major rival to Comcast, the biggest U.S. cable operator
  • It also marks a triumph for Connecticut-based Charter, which was rejected by Time Warner Cable last year
  • Shares of Charter Communications Inc. were up more than 3 per cent in pre-market trading

By Associated Press and Dailymail.com Reporter

Published: | Updated:

Charter Communications has said it will spend $55.33 billion to acquire Time Warner Cable in a cash-and-stock deal that would instantly create one of the largest pay-television and broadband operators in the U.S.

Charter, the fourth largest U.S. cable company, will pay $195.71 per share with $100 in cash and the rest with its own stock, according to a statement released on Tuesday.

As part of the agreement, Charter, which is backed by billionaire media mogul John Malone, will also buy smaller cable company Bright House Networks for more than $10 billion. 

The long-rumored deal earns Charter place as the second biggest operator in the U.S. cable and broadband market, creating a major rival to Comcast Corp. 

Deal: Charter Communications has said it will spend $55.33 billion to acquire Time Warner Cable. Pictured, a cable truck is seen outside a Time Warner Cable office in San Diego, California

Deal: Charter Communications has said it will spend $55.33 billion to acquire Time Warner Cable. Pictured, a cable truck is seen outside a Time Warner Cable office in San Diego, California

The companies on Tuesday valued Time Warner Cable at a total of $78.7 billion.

The deal means Charter, which started as a small operator in St Louis, Missouri in 1993, will gain 12 million customers in cities including New York, Los Angeles and Dallas, Bloomberg reported.

Shares of Charter Communications Inc. are up more than 3 per cent in pre-market trading.

The deal marks a triumph for the company which was rejected by Time Warner Cable last year.

Charter, which is controlled by Liberty Media and now based in Stamford, Connecticut, initially pursued Time Warner with escalating bids in 2013 and 2014, but Time Warner rejected the $61 billion cash, stock and debt assumption offer in January 2014.

Comcast then attempted to acquire the cable company for around $45 billion, but the plans were dropped in April after the Federal Communication Commission said it was concerned that it would mean one company would have too much control over broadband Internet networks. 

Buyer: The deal, which was announced early on Tuesday, will create a major rival to Comcast Corp

Buyer: The deal, which was announced early on Tuesday, will create a major rival to Comcast Corp

Success: Charter is backed by billionaire media mogul and Liberty Media owner John Malone

Success: Charter is backed by billionaire media mogul and Liberty Media owner John Malone

Charter asked for deal negotiations with Time Warner Cable to be expedited after telecom giant Altice expressed interest, a source said earlier this week.

Altice did not have enough time to address all of Time Warner Cable's concerns over a merger, that person added.

'The idea that Time Warner Cable and Charter are merging isn't a surprise, but the price raises some eyebrows,' Craig Moffett, an analyst at MoffettNathanson, told Bloomberg this weekend.

'Altice undoubtedly contributed to Charter having to pay such a steep price to close the deal.'

The announcement comes as the traditional TV industry struggles to grow amid competition from web rivals such as Netflix, or packages of channels, such as Sony.

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