Charter Communications has agreed to acquire its much larger rival Time Warner Cable in a massive $56.7 billion deal that would merge the nation's No. 2 and No. 3 cable operators. If the deal between Charter Communications and Time Warner Cable is finalized, the merger would represent a formidable rival to the country's No.1 cable provider, Comcast.
The merge would mean better access to broadband Internet services for many consumers. It also highlights the urgency that conventional cable companies face in the rapidly changing world of media consumption. As customers increasingly stream videos through the internet, cable providers have sought numerous deals to gain scale and greater bargaining power with content providers, according to the New York Times.
Paolo Pescatore, an analyst with the technology research company CCS Insight believes that the deal benefits Time Warner Cable.
"The timing of this deal clearly shows how desperate Time Warner Cable is to be acquired," he said.
"A tie-up with another cable provider makes perfect sense given the altering landscape in the broadcast industry," he added.
If the deal is finalized, the merger will create a company that controls more than 20 percent of the U.S. broadband market. However, the merged company would still be smaller than industry leader Comcast, which serves around one-third of U.S. broadband users, according to Reuters.
Charter's chief executive Thomas M. Rutledge has said in a statement that the merger would create a company that will be able to offer better services to its customers at affordable prices.
"With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully featured voice products, at highly competitive prices," he said.
Charter has long tried to acquire Time Warner Cable to gain valuable market share in the U.S.' cable and broadband internet sector. However, a $45 billion attempt by Comcast has almost thwarted Charter's plans. Unfortunately, the deal broke down due to concerns that a Comcast-Time Warner Cable merge would lead to higher consumer prices and potential digital roadblocks for online video providers like Netflix, according to The New York Times.
Charter's chief executive is confident that the Charter-Time Warner Cable deal would not fail like the Comcast attempt, however.
"We're a very different company to Comcast and this is a very different transaction," he said.
