Charter to Merge with Brighthouse and TWC

http://www.reuters.com/article/2015/05/25/us-twc-m-a-charter-communi-idUSKBN0OA15L20150525

Looks like Charter will merge with TWC and acquire Brighthouse as well. It is kind of funny that they are acquiring Brighthouse as Brighthouse has a complicated relationship with TWC. Charter is reported to offer TWC $195/share for a $55 billion offer. Brighthouse relies on Time Warner for their programming contracts, and they use the same cable boxes and infrastructure as Time warner. Even use the same program guide and tablet/smartphone app as well as their live TV VOD website for PC and Macs. I think Altice would be an interesting operator, but they are open to others, and Charter really wants to go in for the kill (TWC and Brighthouse), so that is probably why. I think TWC is not really interested in running a cable company.

http://www.reuters.com/article/2015/05/26/us-twc-m-a-charter-communi-idUSKBN0OA15L20150526

Edit: Deal is official, signed at $55-56 billion at $195.71/share. Charter will buy brighthouse alongside merging with TWC, and Malone will buy $5 billion in New Charter stock to help finance along with other forms of financing to get this deal done. However, some people still say that the $55 billion deal is the correct one. Also, the Newhouse family which owns Brighthouse would also get a stake in the company.

 

Looks like a deal has been signed according to "sources." However, there is a $2 billion breakup fee, should the merger not work out (government does not want to approve), another suitor like Altice wants TWC (though that is likely not going to happen, as sources say they have likely conceded). The deal is worth $55.1 billion, and Charter will pay $100 in cash and the rest in stock.

 

And it will probably be approved by the Feds since it will supposedly provide competition against the biggest cable company, Comcast. But will they still stay on track to roll-out Maxx this year and are they committed to no "cap" on monthly Internet data use.

 

Even Comcast wants this deal to go through and I think Patrick Drahi is probably not happy, that he flew all the way to NYC to talk to TWC, only to have the company merging with Charter. Charter does not actually cap, but they used to cap, though it was not really a hard cap, and they only capped only if the nodes/system were congested.

 

I did learn that Charter stopped their cap earlier this year. The possibility of caps was one reason I did not like the Comcast deal. Apparently (and they say it was rarely enforced) Charter previously had a cap of 100GB for base service, 250 GB for Plus service, and 500GB for Max service. And while they claim they have no caps their fine print does say : "... Excessive use of bandwidth that in Charter’s sole opinion, places an unusually large burden on the network or goes above normal usage [is prohibited]. Charter has the right to impose limits on excessive bandwidth consumption via any means available to Charter..."

I just see that the use of streaming services is expanding greatly and a big family could run up some huge Internet data numbers between on-line gaming, video streaming, music services, etc. I just hope the Feds are wary of Caps. I know Netflix will be right on top of it.

 

Charter also has a higher average revenue per subscriber as they don't have analog and they also have only have 2 Internet tiers (60/4 and 100/5) in spectrum market. There are plans to upgrade the tiers, and even offer a 300/50 tier, but that is only in areas where they are competing with Fiber. Charter keeps it's options limited as to increase the average cost per customer.

 

Charter to Merge With TWC and Brighthouse Networks​

May 26. 2015​

Through the grapevine,

The plan is to consolidate the services of TWC/Brighthouse/Charter.

1.) If the merger is approved by Congress and the Justice Department, the company will be called "New Charter."

2.) Charter plans to use Bright House Networks customer service plans and policies, which has the best record of the three.

3.) Charter's cheapest Internet is faster than TWC. But I think Charter has only a two-tiered option. We will see what happens here.

4.) The Guide (The Navigator name was actually dropped a few years ago) would be called "Spectrum." (The name for Charter's Cloud-Based Guide and Technologies.)

5.) Tom Rutledge , President and CEO of Charter will run the new merged company.

6.) Don't expect any major changes for several years in terms of billing or pricing structures.

7.) I also remember reading that Mr. Rutledge wanted this consolidation, because of the Whole House DVR concept. Charter Spectrum does not currently have that.

8.) Charter has been developing the Spectrum Guide to work on boxes from the older SA models to the newer Cisco and Motorola units.

9.) A downside is that Charter has been known to hold older boxes in circulation even more than TWC. Hopefully that will change.

10.) A lot of areas that are Charter use the modern version of the Passport Software, Some are I-Guide. There might be some SARA markets, not sure. They may just convert Navigator to their Spectrum services. There are many older Motorola boxes in TWC markets that need updating.

( Over the years and months, the above is a summary of stuff I found online. Just found out about the "New Charter" name and the "Spectrum" name for TWC today. And that Mr. Rutledge will be the CEO if the merger is approved by regulators.)

Satch

 

Spectrum guide is internally known as Sky UI. It only works on non DVR boxes ATM, but hopefully they will make it available for DVR boxes. Only the latest charter boxes have Sky UI in one market, and it looks pretty good and very modern.

 

Spectrum guide is internally known as Sky UI. It only works on non DVR boxes ATM, but hopefully they will make it available for DVR boxes. Only the latest charter boxes have Sky UI in one market, and it looks pretty good and very modern.

What is Charter using now for both DVR models and TV Guide interfaces? I wonder if one guide type (i.e Passport, I-Guide) currently dominates in most markets? SARA was very reliable, but looked like something out of the Apple II days for graphics and would not bode well today IMO. I think I-Guide is still updated from time to time with new features, but resides in a lot of areas that haven't been updated yet. (i.e old Motorola boxes.) Passport was a good guide. Are they still with Aptiv TV? Passport would have to have an HD Guide with cloud-based technology integration. Navigator, provided that you have a modern box and are in a division that has rolled out cloud-services, is finally getting up to a modern guide. Just some bugs that need to be worked out with more reliable keyboard search.

I think Charter could develop "The Guide" under the Spectrum name and make it work for DVR's. I did not know that the Spectrum Guide was not out yet for DVR boxes. What this merged company needs, and even if its not approved, is cloud storage of shows, series, and if possible settings for the DVR's. Under this system, when a box is swapped out, because all content would be in the cloud, once that box is pinged to a customers' account, the content from the old box carries over! I have always been supportive of cloud storage for DVR shows and series!

Satch

 

I wonder how the new company will deal with Maxx. It's already rolled out in some of TW's largest markets and well under way in more locations. I wonder if the Feds could require minimum Internet speeds as part of the approval process. It will be interesting to watch.

 

Today's WSJ had an interesting story laying out Charter's vision for the proposed merger to acquire TW. While CEO Tom Rutledge had some good information, he missed a few things many cable and broadband users wanted to hear.

He stated there would be no usage caps. (But they dropped those previously several months ago.) He said he embraces steaming TV apps. But he failed to mention whether he would roll out super Internet speeds up to TW's highest levels. He did mention that minimum speeds would remain at their current 60 Mbps and may be expanded. Too bad he never really said they would continue in keeping TW's existing super speedy 300Mbps. Nor did he mention they would expand to that level or complete the 300Mbps Internet that supposedly is being rolled out this year in San Diego, Kansas City, Dallas, etc. So there are still lots of answers yet to learn. And all at what price levels? Here's some highlights of his talking points:

Charter to D.C.: We’re No Comcast
"...As top executives at Charter Communications Inc. and Time Warner Cable Inc. laid out their vision Tuesday for the cable companies’ planned merger, their pitch seemed aimed as much at Washington as at Wall Street....Mr. Rutledge, who will become chairman and CEO of the new behemoth, said Charter won’t impose caps on the data ...Charter has no plans to block any Internet traffic or engage in “paid prioritization”on its pipes....Through Charter we’ll offer consumers a broadband product that makes watching online video, gaming and engaging in other data-hungry applications a great experience, including at peak times...He said that Charter’s minimum broadband speed tier is 60 megabits per second today—“considerably faster and less expensive than Time Warner Cable’s comparable tiers.” He said Charter would expand these offerings across its new footprint...."



http://www.wsj.com/articles/charter-positioning-twc-merger-for-washington-1432656619

 

Charter has only two price levels for internet. One is 60/4 for 59.99 and 100/5 for only 110.99. No slower Internet that is cheaper. Either take it or leave it. Charter would probably merge maxx 300 with their ultra 100/5 or maybe they will add more tiers including a cheaper one if the fcc requires that.

 

http://www.dslreports.com/shownews/Heres-Time-Warner-Cable-CEOs-Letter-To-Employees-133920

This is what Time Warner told their employees about the recent merger with charter.

 

I would not be surprised if the Feds require them to offer a cheaper, slower service. Even though the Feds designated 25Mbps as broadband, TW offers plans that are slower and cheaper. My neighbor has Internet only from TW at speeds of 15 Mbps for around $34 a month. And he is happy with it. I do not think he would be happy paying $59.99 for 60Mbps. And doesn't TW offer a very basic Internet for about $15 a month.

 

That is my thinking, as Charter tiers are a bit expensive, for what you are getting. Those happy with a slower cheaper tier, are simply switching to DSL or even abandoning internet and using their phones. Charter could very well mix some of TWC's tiers with their current tiers to give a better value proposition and to appease regulators. One of the terms that the feds gave to the Comcast/NBC merger was a super cheap broadband tier for those who qualify under certain assistance programs, or are low income. Yes, TWC offers a basic 2/1mbps tier for only $15.00/month as well as a 6/1 tier for only $29.99/month under the current rates on timewarnercable.com.

http://www.dslreports.com/shownews/Time-Warner-Cable-CEO-Could-Make-97-Million-From-New-Merger-133942

Also, Rob Marcus (current TWC CEO) is going to likely get a big payout if this merger goes through. It is going to be quite a rollercoaster ride.

 

Here is an overview on the merger with Tom Rutledge (Charter CEO).

 

http://www.cnbc.com/id/102707548

Not sure how true this is, but some say this could lead to lower bills, but I am wary about that, as John Malone is known for raising rates.

 

Also, Charter's internet tiers are like the old Time Warner in that the modem is included in the service. You can use your own modem with Charter, but you will not save any money doing so.

 

http://www.latimes.com/business/la-fi-lazarus-20150529-column.html

What is scary about this is that 2 companies Charter-TWC-Brighthouse and Comcast could control 75 percent of cable broadband subscribers in America. However, I am sure there will be concessions. I know AT&T is resisting some on the DirecTV merger which should likely go through despite having more TV subscribers combined than Comcast.

 

With people grandfather claused with low price Internet and Docsis 2.0 modems that can't get the higher speeds above the TWC Turbo level, I can't see Charter too thrilled about going out and updating millions of people by replacing their rented modems.

Since Charter currently has only two Internet speeds, why wouldn't they propose to keep the current TWC/BHN plan of multiple Internet packages? It would be more affordable for people on budgets, or those who who don't need faster Internet above Standard. Certainly no higher than Turbo.

Yet at the same time, those who want speeds above that are probably going to be geeky enough and computer savvy enough were they could just buy their own equipment, or work with the new merged company on rental options though a case by case basis. In today's day and age, Charter's two tier only Internet package is not enough.

Little will change for probably another three to five years anyway. It would probably be more realistic to assess the Internet needs and technology for the customer at that time. This is true regardless of whether the merger goes through or not. Charter/TWC/Bright House are going to not only look at what the competition is offering, but also what the customer can afford as cable rates continue their yearly rise. It's not an easy business situation.

Satch