Comcast and Time Warner May Throw Charter a Bone, or 3 Million

Source: Thinkstock

Source: Thinkstock

Comcast Corp. (NASDAQ:CMCSA) and Time Warner Cable Inc. (NYSE:TWC) are in talks to discuss the possibility of divesting 3-5 million subscribers worth about $20 billion to competitor Charter Communications Inc. (NASDAQ:CHTR) as part of an effort to alleviate the concerns of government antitrust agencies, which must approve Comcast and Time Warner’s proposed merger.

Sources who spoke with NBC and Reuters say that the talks are in the very early stages and no decisions have been made yet. Reuters added that other cable companies are also interested in Comcast’s subscribers.

The three companies are considering either pursuing a straight-up sale of those 3 million subscribers, or creating an entirely new company with which to spin off those subscribers. Time Warner and Comcast would then give Charter a minority stake in the resulting company. The companies have also considered a combination of both options.

Analysts say that it’s likely that Comcast will end up offering Charter more than 3 million subscribers. “Once you offer something up, you only offer more up; you don’t offer less up,” said Amy Young, an industry analyst at Macquarie who spoke with FierceCable. Sources who spoke with Reuters, however, said that the it is “unlikely” that Comcast would offer 5 million subscribers.

Comcast has promised that it would divest at least 3 million subscribers for weeks now; the sale of that many subscribers would bring the company’s subscriber base below 30 percent of the U.S. market. Comcast hopes that this will allay any fears on the part of antitrust agencies that the proposed merger between itself and Time Warner would be a threat to competition.

Should Comcast and Time Warner’s merger go through, the resulting company would account for 20-40 percent of high-speed internet customers in the United States, according to Comcast’s recent filing with the Federal Communications Commission, per Reuters.

The proposed deal between Comcast and Time Warner has generated a lot of controversy over the last few weeks, with spokespeople from antitrust agencies like the FCC and the U.S. Justice Department initially claiming that it was highly unlikely that the deal would be allowed to pass.

The proposed divestment would be a major victory for Charter Communications, which lost the bid for Time Warner Cable to Comcast earlier this year, when the cable giant made a last minute offer.

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