Charter Communication and Time Warner Cable announced today that the two cable providers plan to merge in a $55 billion deal that values Time Warner Cable at nearly $79 billion.
Charter is also buying a smaller provider, Bright House Networks, which has 2.5 million customers. The three companies combined under the Charter banner will have roughly 24 million customers — just under the 27 million customers of rival Comcast.
Ross Rubin, principal analyst at Reticle Research, says a larger Charter “can negotiate more favorable terms with broadcasters,” possibly creating savings.
“They’re going to argue this is really great for consumers,” says Rob Frieden, a professor of telecommunications and law at Penn State University. But, Frieden predicts that the new competitive landscape would stymie a possible “maverick” company from emerging.
“You also have a situation where two operators control 80 percent of the broadband marketplace,” he says.
The deal may go more smoothly than the failed Comcast-Time Warner Cable merger, partly because Charter could now serve as a competitive check to Comcast.