Charter went into the weekend with some bad news: The New York Public Service Commission is seeking to revoke its Time Warner Cable merger approval. But one analyst said it’s not likely to happen.
New Street Research analyst Jonathan Chaplin said the dustup, stemming from the NYPSC’s belief that Charter failed to meet its obligation to cover more homes in New York State, is an “aggressive negotiating strategy” that could carry some political benefits in upcoming elections.
“It is wildly unlikely that Charter will lose its license to operate in NY. If there is an incremental cost for the Company arising out of this dispute it will be negligible. Importantly, this is nothing like the situation facing Sinclair,” Chaplin wrote in a research note.
Last Friday, the NYPSC officially filed an order saying that Charter had failed to meet a June 18, 2018 deadline for additional passed homes. As a condition of its merger approval in New York state, Charter was required to pass an additional 145,000 unserved and underserved homes and businesses in the state.
Charter filed an update on its progress late last year and in June, the NYPSC disqualified 18,363 passings from that report, claiming that many of the passings were in heavily populated urban areas (like New York City) and therefore failed to meet the requirement of new passings.
The Commission ultimately decided Charter failed to meet the build-out requirements and therefore is looking to revoke Charter’s merger agreement with Time Warner Cable in New York.
“This step is being taken after repeated attempts by the Commission, through administrative enforcement, which have not resulted in changes to Charter’s commitment to meet the requirements of the Network Expansion Condition,” the NYPSC wrote.
"In the weeks leading up to an election, rhetoric often becomes politically charged. But the fact is that Spectrum has extended the reach of our advanced broadband network to more than 86,000 New York homes and businesses since our merger agreement with the PSC. Our 11,000 diverse and locally based workers, who serve millions of customers in the state every day, remain focused on delivering faster and better broadband to more New Yorkers, as we promised," Charter said in a statement.