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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.
 
sdhdtv
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
Charter wants to have high average revenue per subscriber, so having two tiers will make sense, but I could see them having cheaper tiers, as a way to get new customers and to appease the feds. One positive note is that new Charter might use Brighthouse Networks form of Customer service, which is said to be better than TWC and Charter, so Charter wants to not be a company with bad customer service. I am sure they will figure out something for the DOCSIS 2.0 tier, as most modern cableboxes only have DOCSIS 2.0 modems or 2.0+ (DOCSIS 2.0 with some channel bonding). Even a 25/3 tier is possible on a D2.0 modem should the feds require a minimum definition of Broadband for low income and/or those on assistance.
 
http://deadline.com/2015/06/john-malone-charter-time-warner-cable-trading-water-1201436299/

John Malone wants to revive Time Warner which is "treading water." He is very confident that the feds and the FCC will approve this merger. It will take around 3 years to upgrade TWC systems, but the remaining ones with analogs will quickly be converted to all digital, and the Program guide will be moved into the cloud and not on Set top boxes. Legacy boxes can run a cloud based guide on a special QAM channel like VOD or something like that, so older boxes can have that same experience as the modern ones. Modern ones will run the server based version. Malone makes interesting feedback about Mobile and Wifi enabled phones, which is kind of cool.

Netflix remains a threat, but he says that Charter could create its own version of Netflix with possibly other cable companies.

Having the minimum broadband speed at 25/3 is not a problem to Malone as Cable Companies are capable of that speed, moreso than telco's (unless they upgrade to fiber).

Just another article and he also talks about Altice and Drahi and it is too early to tell if he can get a lot of cost savings out of suddenlink. Drahi is known for cutting costs and improving profitability, though be careful what you wish for, as Drahi can get quite extreme.
 
If Charter includes modems with their service, I wonder if those of us who bought modems, (and some are pretty expensive) , will be forced to dump them and uses Charters equipment?
 
If Charter includes modems with their service, I wonder if those of us who bought modems, (and some are pretty expensive) , will be forced to dump them and uses Charters equipment?
You can keep them, unless you want to upgrade, but even they don't prevent you from doing so. Charter lets people use their own modem, but you will have to buy it, and there are no cost saving. Charter has a modem compatibility list, so it is possible.

Also, DOCSIS is an industry standard, so you can use a Time warner modem on a Charter system and vice versa.
 
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Two more developments in the Cable/TV industry. First, Dish Network is in talks to merge with T-Mobile. And maybe bigger per the WSJ; John Malone (Charter) is figuring out how to merge and consolidate studios and channels. it provides interesting reading.


6-432015:
Liberty’s John Malone Eyes Content Consolidation
Cable investor envisions Lions Gate buying Starz, among other deals

"Billionaire John Malone, fresh from helping engineer a mammoth cable-TV merger, is examining ways to consolidate studios and smaller channels to better compete as the traditional TV bundle begins to unravel....Mr. Malone said in the annual meeting that new Web-based TV offerings and “skinny” TV packages will put pressure on the traditional cable TV bundle. “The bundle will come apart,” he said. As consumers get more flexibility, TV channels will have to work harder to win them over...."

http://www.wsj.com/articles/libertys-john-malone-eyes-content-consolidation-1433360774 Malone


And

5-4-2015 WSJ:
Dish and T-Mobile US in merger talks - WSJ

"Dish Network Corp (DISH.O) and T-Mobile US Inc (TMUS.N) are in talks over a merger that would combine the second-largest satellite TV operator in the United States with the fourth-largest wireless carrier, the Wall Street Journal reported.

http://www.reuters.com/article/2015/06/04/us-dish-network-m-a-t-mobile-us-idUSKBN0OK06H20150604
 
And on-line streaming gets another player. Showtime has announced that they will stream their content (without the need for a cable company) for $10.99 a month. HBO also has a streaming service but costs $15.99 a month. I suspect HBO may be under pressure to adjust their prices. For now, Showtime will only be available on Apple devices, but that will change shortly.
 
Going to be an interesting year with all the new mergers and acquisitions going around lately. I would not be surprised if Starz/Encore makes a service that does not require a subscription. I could even see Epix doing so as well.
 
I read the article. My worry is that Charter will stop implementing super high speed Internet. Though they say new regulations will not restrict their new infrastructure. But as we transition to more and more streaming, 4K streaming, more devices per home, I think it's important for a continued national rollout of 200 or 300 Mbps speeds. I just have not heard them address this yet. And Malone calls the shots. And he's so bottom lined oriented, and tries to squeeze every penny of profit per subscriber, he may drag out high speed rollouts. And I like Malone. And I don't fault anyone's drive for profits. But in my market, where I am really are stuck with TW for the highest speed Internet, I am concerned how things will turn out.
 
At&t is thinking about deploying their gigabit uverse service in San Diego, but not sure if it will actually come here.
 
They might wire fiber for their gigabit service downtown and some of those big apartment and condo projects in UTC, but I think my area, Carmel Valley, will be left out.

One rumor I heard about the Dish Network merger is to give Dish the ability to stream over 4g. And if the Dish merger fails, a Citigroup Analyst today said: "...Nevertheless, the analyst stated that there are two options for Dish Network: Acquire T-Mobile or sell itself to Verizon Communications Inc....".
 
I don't expect Rancho Bernardo to get it either. AT&T would probably cherry pick whatever areas they want to, or even some kind of dense area like in Mission Valley with fancy condos.
 
There is a story in today's WSJ on why cable bundles exist. The story is long but here are a few items.

5/9/2015:
Why Does the Cable-TV Bundle Exist Anyway?
Selling packets of channels to subscribers once made sense, but not so much anymore

"..For four decades, the number of channels on the cable-TV dial has risen with seemingly unstoppable momentum, bringing consumers more choices than ever before.

Sounds great, except most people don’t want to pay for all 189 channels they typically get....Now, push back is building that could finally break the bundle. Pay-TV subscriptions have peaked in the U.S., and viewers have alternatives through Internet services such as Netflix, Hulu and YouTube. Distributors like Verzion’s FiOS are trying to find ways to offer flexibility in pay-TV packages, ...Customers “don’t want to be paying these huge cable bills for a lot of channels they aren’t watching,” said CBS Corp. Chief Executive...".


http://www.wsj.com/articles/why-does-the-cable-tv-bundle-exist-anyway-1433807825
 
Well, I'm not necessarily for the merger of Charter and Time Warner, but in my opinion Charter seems less evil than Comcast. And as of now Charter does not impose any data caps which is good.
 
Well, I'm not necessarily for the merger of Charter and Time Warner, but in my opinion Charter seems less evil than Comcast. And as of now Charter does not impose any data caps which is good.
I would agree that charter is the lesser evil when compared to Comcast. Charter even promises not to throttle or charge extra fees to providers for fast lanes.
 
http://www.dailyfinance.com/2015/06/19/charter-bid-time-warner-cable-better-for-consumers/

Here is an article saying if this is better for consumers. It also mentions that the price of cable has increased twice over the cost of inflation, which may or may not be a bad thing.

http://www.bizjournals.com/stlouis/morning_call/2015/06/charter-marketing-14-billion-in-loans-for-time.html

Looks like Charter will get $14 billion in loans, so it can finance a Charter-TWC merger, while also acquiring Brighthouse for $10.4 billion.
 
http://apps.fcc.gov/ecfs/document/view?id=60001097273

Charter has released a public filing to the FCC ECFS, and it has some interesting information. There is definitely going to be a push towards All Digital, and Charter hopes to offer All Digital to any remaining TWC and Brigthouse systems within 30 months. Charter is also going to use their new Spectrum guide, which the filing indicates can run on a Roku or perhaps a Smart TV. Charter does plan on having apps, which they do, but want TWC's selection of channels. Charter also talks about this new WorldBox which has Downloadable security which is funny as Tom Rutledge was the COO of CableVision in NY and he had been involved with CableVision and Samsung to deploy a STB that uses NDS Downloadable Security. It sounds like some kind of DVR service, with a cloud based EPG. Charters Cloud based EPG does not work on DVR boxes, but should eventually be expanded to them in the near future.

Interent wise, MAXX is likely going to continue on, but New Charter will figure out how to implement their own tiers with it. Charter promises no caps for 3 years, and there will be a 15 mbps tier which is likely the current non MAXX standard.

Edit: Perused the document again, and I think I misinterpreted the 15 mbps tier, as that would have been 15 mbps standard to 60 mbps.

Just some information on the filing. If I missed anything, feel free to post it here.
 
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