Business & Economy

Charter buying Time Warner Cable, plans to offer Dodgers TV channel

This April 1, 2015 photo shows a Charter Communications van in St. Louis. Charter Communications is  buying Time Warner Cable for about $55 billion.
This April 1, 2015 photo shows a Charter Communications van in St. Louis. Charter Communications is buying Time Warner Cable for about $55 billion.
Jeff Roberson/AP

2:22 p.m.: Charter says it will offer Dodgers TV channel

Thousands of Los Angeles fans who have been prevented from watching their favorite team on television may soon get relief.

Just hours after it was announced it would purchase Time Warner Cable, Charter confirmed to KPCC via email that the company "plans to roll out the Dodgers channel to its customers in LA in the coming weeks."

The channel, SportsNetLA, has been unavailable for many viewers because of a stalemate in negotiations.

According to the Los Angeles Times, which first reported on the plan:

Charter customers in Glendale, Burbank, Malibu, Long Beach and other regions will have SportsNet LA within a few weeks, Rutledge said. He added that his company will have to take a hard look at the channel's finances.

Charter announced earlier that it would purchase Time Warner Cable for about $55 billion. An earlier offer from Comcast fell through after intense pressure from federal regulators, who worried the combined company, with more than half the country's high-speed Internet customers, would be able to undermine online video competitors like Netflix, according to the Associated Press.

Charter executives said they were confident they would get approval for the deal, though at least one analyst warned that swapping Charter for Comcast would still give the new company a great deal of control over the Los Angeles market and wouldn't necessarily result in more choices and lower prices.

"Yes, monopoly can be ruthlessly efficient when it comes to setting prices in the marketplace. Usually that benefits the monopoly and not the customers of it," Matt Wood, policy director at Free Press, told KPCC's AirTalk

Steve Effros, former president of the Cable Telecommunications Association, countered by saying the cost of cable is being driven at least in part by the inclusion of products such as the Dodgers channel, which in turn can be driven by price wars for star athletes on professional league teams. Cable companies get caught in the middle of those price wars and are forced to raise prices, Effros said.

"As the products get more expensive, the price to the customer gets more expensive. The only time that's going to end is when customers say 'No, I'm not going to buy this anymore.' The sports channels are the best examples of this," Effros said on AirTalk.

Wood said they needed to study the deal further before deciding whether or not to formally oppose it.

— KPCC staff

6:53 a.m.: Charter buying Time Warner Cable for $55.3B

Charter Communications is buying Time Warner Cable for $55.33 billion, creating another U.S. TV and Internet giant.

And executives say they're confident regulators will allow it.

The deal comes a month after Comcast, the country's largest cable provider and owner of NBCUniversal, walked away from a $45.2 billion bid for Time Warner Cable, the No. 2 cable company, after intense pressure from regulators. Time Warner Cable had chosen the Comcast deal and rejected a $38 billion hostile offer from Charter in early 2014.

There has been a wave in consolidation in the cable industry as providers are starting to lose TV subscribers, costs for TV, sports and movies rise and pressure from online video services such as Netflix and Hulu increases.

John Malone's Liberty Broadcast Corp., which owns more than a quarter of Charter's stock, is backing the acquisition, which puts Charter in the same league as Comcast. Liberty Broadband is expected to own about 20 percent of the new Charter, which will also include Bright House Networks, a smaller cable provider Charter said Tuesday it is buying for $10.4 billion.

Charter, combined with Time Warner Cable and Bright House, will have nearly 24 million customers, compared with Comcast's 27.2 million. It also lags AT&T, whose pending deal with DirecTV would give it 26.4 million TV customers and 16.1 million fixed Internet customers as well as tens of millions of wireless customers.

Whether government regulators will approve the Charter deal after quashing Comcast's bid for Time Warner Cable remains to be seen. The Comcast deal would have given it more than half of the country's high-speed Internet subscribers, which the government feared would give it the power to undermine online video competitors.

Charter will have less than 30 percent of those fast-broadband customers, the company said Tuesday.

"We're a very different company from Comcast and this is a very different transaction," said Charter CEO Tom Rutledge on a conference call Tuesday. "We're confident it's going to get done," said Time Warner Cable CEO Rob Marcus.

In a statement Tuesday, Federal Communications Commission Chairman Tom Wheeler said that the FCC weighs every merger on its own to see if it will be in the public interest, and that "an absence of harm is not sufficient." He said the FCC "will look to see how American consumers would benefit" from the deal.

"One has to be sober about genuine risks that this deal could still be rejected," said MoffettNathanson's Craig Moffett in a research note Tuesday, given the number of Internet and TV subscribers involved.

The deal comes with a $2 billion break-up fee if it doesn't go through. If regulators don't approve it, Charter would pay Time Warner Cable; if Time Warner Cable kills the deal and goes with another buyer, it'll pay.

Charter Communications Inc., based in Stamford, Connecticut, will provide $100 in cash and shares of a new public parent company equal to 0.5409 shares of Charter for each outstanding Time Warner Cable Inc. share. The transaction values each Time Warner Cable share at about $195.71.

The companies on Tuesday valued New York-based Time Warner Cable at a total of $78.7 billion, including debt.

The deal is expected to be completed by the end of the year.

— Tali Arbel/Associated Press. Michelle Chapman contributed to this report.

This story has been updated.