Comcast selling some cable systems to Charter

0

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.
Copyright 2014 The Associated Press. All rights
reserved. This material may not be published, broadcast, rewritten or
redistributed.

No posts to display