Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) have reportedly entered talks to determine how to sell off up to 5 million subscribers to Charter Communications (NASDAQ: CHTR). The selloff--worth potentially $20 billion or more, based on recent valuations--would achieve two potential goals: get Charter to back off from making its own hostile bid for Time Warner Cable, and alleviate concerns of elected officials and regulators that the deal would create a cable behemoth.
The ever-important "people familiar with the matter" told the Financial Times that Comcast and Charter discussions are at an early stage but that they could result in a deal involving between 3 million and 5 million subscribers. Comcast has already told regulators it would sell off about 3 million subs for multiple billions of dollars.
Some reports had it that exiled Time Warner Cable executives might be in the running to take the subs and create their own company. Now, at least according to the latest report, it appears that Comcast and Time Warner Cable have gone back to the first option: selling the subs to Charter as a way to appease the MSO's hurt over being left at the altar when the bidding ended with Comcast offering $45.2 billion for TWC.
Industry analysts think it's likely that Comcast will offer Charter--or whoever else might be in the market--more than 3 million subscribers.
"Once you offer something up, you only offer more up; you don't offer less up," Amy Young, an analyst with Macquarie told FT. "It is a starting point in the negotiations.
Elsewhere, the deal continued to polarize. The latest to weigh in--Dave Schaeffer, founder and CEO of Cogent Communications--fell squarely on the disapproval side.
"Our concern is that it will limit competition," Schaeffer told The New York Post, pointing to worries about interconnection ports needed for free-flowing Internet traffic.
A merger "will allow Comcast to further extend its monopoly power over its customers."
Franken asks Netflix's Hastings to share views on Comcast-TWC acquisition
Charter mulls competing to acquire Time Warner Cable
Charter pushes TWC investors to reject Comcast offer
Time Warner Cable exiles could run new cable company formed by Comcast sub spinoff
Cogent offers to pay cable MSOs, telcos to improve Internet traffic exchange