Charter Communications’ offer to buy Time Warner Cable for $55 billion might matter on Wall Street, but isn’t likely to alter dismal customer service records held by the two companies.

Charter’s offer comes in the wake of a failed merger of Time Warner and Comcast, which would have given the combined company control of about 60 percent of the U.S. cable market and was presumably the reason the Federal Communications Commission signaled it would likely block the deal.

All three cable companies performed poorly in a survey by Consumers Union, the advocacy arm of Consumer Reports. On Tuesday, the group announced it would oppose the Charter deal, just as it had the Comcast purchase.

“When it comes to cable consolidation, history teaches us to be very concerned about the benefits for consumers,” said Delara Derakhshani, the policy counsel for Consumers Union.

Derakhshani said Charter ranked 14th and Time Warner 16th among 17 cable companies in customer satisfaction, according to its survey.

Other rankings on customer satisfaction are equally dismal. The American Customer Service gave ratings of 60 – out of 100 – to Charter and Comcast on its customer service survey of cable customers. Time Warner got a rating of 56.


Most analysts expect this deal will go through because a combined Charter and Time Warner won’t match the size of Comcast. But U.S. Rep. Chellie Pingree, D-Maine, doesn’t see anything in the new deal that suggests consumers will gain much, including Time Warner’s 360,000 customers in Maine.

“It doesn’t seem that different,” said Pingree, who was one of the leading congressional opponents of the Comcast-Time Warner deal.

“It’s not quite as big, but I don’t think there’s any cable customer who thinks their cable company is too small.”

Pingree believes many of those who opposed the previous deal also will oppose the new Charter-Time Warner combination.

“You’re still going to be combining two big companies and reducing competition – and this is an industry that needs competition,” she said.

Pingree is the wife of S. Donald Sussman, owner of the MaineToday Media, parent company of the Portland Press Herald.



Charter’s offer of $55.75 billion, plus assumption of Time Warner’s debt of nearly $23 billion, tops Comcast’s offer last year of $45.2 billion. Charter in early 2014 offered $38 billion for Time Warner, a figure that was rejected by Time Warner’s board. (In that deal, Charter anticipated selling off portions of Time Warner’s New England business to Comcast.)

Charter said this week it’s also going ahead with a deal to buy Bright House, the nation’s sixth-largest cable company, for $10.4 billion.

Executives of the companies involved and analysts said they expect the FCC to approve the deal, largely because the combined company will control less than 30 percent of the market, a benchmark often cited by the FCC.

Regulators had worried that Comcast’s dominance of the high-speed Internet market after the Time Warner purchase could have led the company to undermine increasingly popular online video competitors like Netflix.

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. The traditional cable ecosystem is breaking up – for example, you can now subscribe to HBO online without having to pay for cable, or pay for a smaller group of channels that you watch via a Sony PlayStation.


Getting bigger is one way to deal with those changes. It gives cable providers more lucrative Internet subscribers and more leverage with the entertainment companies that provide the channels.

In a statement Tuesday, FCC 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.

According to The Associated Press, Charter will have less than 30 percent of the customers in the U.S. that the FCC defines as broadband: Those downloading at 25 megabit-per-second and faster. Comcast plus Time Warner Cable would have had more than half of those subscribers.

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

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

“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.


But it doesn’t raise the same immediate concerns as the Comcast-Time Warner Cable merger, said John Bergmayer of Public Knowledge, a public interest group that had opposed the Comcast deal. “The scale is totally different. It’s not the No. 1 buying the No. 2,” he said.

Another sign of confidence from the companies: The deal comes with a $2 billion breakup 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.

John Malone’s Liberty Broadcast Corp., which owns more than a quarter of Charter’s stock, is backing the acquisition, according to AP. Liberty Broadband is expected to own about 20 percent of the new Charter.

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 expect to complete the deal by the end of the year.

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