In anticipation of its proposed merger with Time Warner Cable, Comcast Corporation has developed a three-pronged approach to divesting 3.9 million customers to Charter Communications and a new cable venture, SpinCo. The divestiture will ensure that post-transaction, Comcast will retain less than 30% of the total residential video subscriber base in the U.S. – a critical point for those concerned that a merger between Time Warner Cable and Comcast would result in too much market concentration held by one company.
Called an important step in Comcast’s merger with Time Warner Cable, divestiture supports the company’s goal of making this a “pro-consumer and pro-competitive” transaction. In addition to enabling Charter Communications to become the second largest cable company in the nation by assuming 1.4 million former Time Warner Cable customers, as part of the divestiture Comcast will help create a new, independent, publicly-traded cable operator, SpinCo, to manage 2.5 million former Comcast customers.
Subject to several conditions and Hart-Scott-Rodino and Federal Communications Commission regulatory approvals, it is thought that this divestiture will make the merger of Comcast and Time Warner Cable more appealing. It also assuages any lingering discontent Charter may have felt having lost to Comcast in its own effort to purchase Time Warner Cable.
Charter will gain customers in Ohio, Kentucky, Wisconsin, Indiana andAlabama, while divesting them in California, New England, Tennessee, Georgia, North Carolina, Texas, Oregon, Washington and Virginia. SpinCo will own cable systems that are near Charter’s existing footprint in Michigan, Minnesota, Indiana, Alabama, Tennessee, Kentucky and Wisconsin.
Announced on April 28th, support for the divesture is expected to start rolling in in the days ahead and policymakers and consumers, alike, gather additional information and better understand the benefits this proposed transaction will provide to consumers by way of greater technological opportunities, programming efficiencies, and streamlined customer service operations.