Posted: Monday, April 28th 2014 at 8:10am
Comcast selling some cable systems to Charter
By The Associated Press
PHILADELPHIA (AP) -- Comcast plans to shed about 3.9 million subscribers in a deal with cable competitor Charter Communications Inc. to help Comcast's acquisition of Time Warner Cable clear regulatory hurdles.
Comcast is creating and spinning off a new publicly traded cable provider that will serve about 2.5 million of its existing customers. Charter will form a new holding company that will have an approximately 33 percent stake in the Comcast spinoff. Comcast stockholders and former Time Warner Cable shareholders are expected to own about 67 percent of the new company.
In February Comcast Corp.'s $45.2 billion bid topped Charter's offer for Time Warner Cable Inc.
Comcast said Monday that the combined Comcast-Time Warner Cable will divest systems to Charter, resulting in a reduction of about 3.9 million video customers.
Once the Comcast-Time Warner Cable deal closes, Charter will acquire about 1.4 million existing Time Warner Cable subscribers. This will boost Charter's current residential and commercial video customer base to about 5.7 million from 4.4 million. Charter and Comcast will also each transfer about 1.6 million customers to the new company.
Charter said in an investor presentation that it estimates the acquisition of the cable systems, which gives it about 1.4 million Time Warner Cable subscribers, will cost approximately $7.3 billion. It estimates the value of the spinoff company at about $14.3 billion.
Comcast said that the new cable provider it is creating and spinning off will have a nine-member board. That will include six independent directors and three appointed by Charter. Comcast itself will have no ownership stake in the spun off company and will have no role in managing it. Charter will offer management services to the new company.
Both Comcast and Charter's boards have approved the transactions, which are subject to Comcast's deal with Time Warner Cable closing, approval by Charter shareholders and other conditions. Time Warner Cable's board has also given its necessary approval.
Comcast said it plans to use proceeds from the transactions to lower its debt. It still anticipates its combination with Time Warner Cable bringing about $1.5 billion in operating savings. The combination is targeted to close by the end of the year.
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