Latest news with #cordcutting
Reuters
16-05-2025
- Business
- Reuters
Breakingviews - Charter deal runs valuable $35 bln extension cord
NEW YORK, May 16 (Reuters Breakingviews) - Charter Communications (CHTR.O), opens new tab is building a different sort of bundle. The U.S. cable operator agreed, opens new tab to acquire smaller rival Cox Communications in a $35 billion deal, including net debt. Hefty cost savings would come in handy as the industry wrestles with cord-cutting customers and other challenges. If trustbusters greenlight the combination, the best thing boss Chris Winfrey will be buying is time. The merger with family-owned Cox features quirky finance. Charter is paying $4 billion in cash and nearly 34 million partnership shares worth about $12 billion. Some $6 billion of convertible preferred units make up the rest, yielding almost 6.9%, or more than $400 million a year, until they're eligible to be exchanged for common stock. All in, Cox backers would own 23% of a company leapfrogging Comcast to be the largest U.S. cable provider, with 38 million customers. Cox offers some breathing room. Charter anticipates squeezing out $500 million of expenses a year, after valuing its quarry at the same 6.4 times multiple of EBITDA at which it trades. Those savings are worth almost $4 billion today, once taxed and capitalized. They'd be a welcome fillip to the bottom line of a company whose top line grew just 2% over the previous two years. More broadly, the transaction looks like a good use of Charter's capital. Generously add the synergies, which won't be fully achieved for a few years, to the $3 billion of operating income Cox generated in 2024, and the after-tax sum implies an 8% return from the enterprise. Charter's weighted average cost of capital is around 7.5%, per MoffettNathanson analysts, and New Street's reckon deal synergies could be even higher. The strategic benefits are tantalizing, too. Charter has been remaking itself as pay-TV subscribers flee for video streamers such as YouTube and mobile providers roll out WiFi service to compete with broadband. As the buyer expands its network, boosts internet speeds and grows in wireless with a Verizon Communications partnership, Cox has even more customers to target with a variety of packages. This fierce competition, from challengers both old and new, might ease the deal's regulatory path, but it's far from assured. When AT&T tried to consolidate the cellular market by acquiring smaller rival T-Mobile US in 2011, U.S. antitrust authorities blocked it. A few years later, Comcast's attempt to absorb Time Warner Cable met a similar fate. And scrutiny of M&A has only become tougher. Assuming Charter can get through Washington, however, it will have plugged in a useful extension cord. Follow @jennifersaba, opens new tab on X CONTEXT NEWS Charter Communications said on May 16 it had agreed to buy smaller rival Cox Communications for $34.5 billion, including debt, in a deal that would create the biggest U.S. cable operator with nearly 38 million customer relationships. Under terms of the deal, shareholders of privately held Cox would receive $4 billion in cash, a notional $6 billion of convertible preferred units paying a 6.875% coupon, and 33.6 million common shares with an implied value of $11.9 billion. Cox would own about 23% of the combined company. Charter said it expects to generate about $500 million of annual cost savings within three years of the deal closing. Citi and LionTree are advising Charter while Allen & Co. advises family-owned Cox Enterprises. BDT & MSD Partners, Evercore and Wells Fargo are advising the Cox Communications subsidiary.
Globe and Mail
16-05-2025
- Business
- Globe and Mail
US cable giants Charter and Cox, under assault by streaming services, pursue $34.5 billion merger
Charter Communications has offered to acquire Cox Communications, a $34.5 billion merger that would combine two of the top three cable companies in the U.S. Cox is the third largest cable television company in the country, with more than 6.5 million digital cable, internet, telephone, and home security customers. It has a strong foothold in states spanning from California to Virginia. Charter Communications, known more widely as Spectrum, has more than 32 million customers in 41 states. The cable industry has been under assault for years from streaming services like Disney, Netflix, Amazon and HBO Max, as well as internet plans offered by mobile phone companies. Comcast, which is of nearly equal size to Charter, spun off many of its cable television networks in November as as consumers increasingly swap out their cable TV subscriptions for streaming platforms. So-called 'cord cutting' has cost the industry millions of customers and left them searching for ways to successfully compete. Charter said Friday that it will acquire Cox Communications' commercial fiber and managed IT and cloud businesses. Cox Enterprises will contribute Cox Communications' residential cable business to Charter Holdings, an existing subsidiary partnership of Charter. Cox Enterprises will own about 23% of the combined company's outstanding shares. The transaction, which needs approval from Charter shareholders as well as regulators, includes $12.6 billion in debt. The proposed deal is one of the largest in over a year. Mars' announced a $30 billion deal with Kellanova last summer and Exxon Mobil's approximately $60 billion acquisition of Pioneer Natural happened in late 2023. The combined company will change its name to Cox Communications within a year after closing. It will keep Charter's headquarters in Stamford, Connecticut, and have a significant presence on Cox's Atlanta, Georgia campus following the closing. After the deal is complete, Charter CEO Chris Winfrey will become president and CEO of the combined company. Cox CEO and Chairman Alex Taylor will serve as chairman. Cox will be able to keep two directors on the 13-member board. Advance/Newhouse, which is part of Charter, will retain its two board members. The transaction is expected to close at the same time as Charter's merger with Liberty Broadband, which was approved by Charter and Liberty Broadband stockholders in February.
CBS News
16-05-2025
- Business
- CBS News
Charter and Cox to merge in blockbuster $34.5 billion cable deal
Charter Communications has agreed to merge with Cox Communications in a $34.5 billion deal that will combine two of the top three cable companies in the U.S. Cox is the third-largest cable television company in the country, with more than 6.5 million digital cable, internet, telephone, and home security customers. It has a strong foothold in states spanning from California to Virginia. Charter Communications, known more widely as Spectrum, has more than 32 million customers in 41 states. The cable industry has been under assault for years from streaming services like Disney, Netflix, Amazon and HBO Max, as well as internet plans offered by mobile phone companies. Comcast, which is of nearly equal size to Charter, spun off many of its cable television networks in November as as consumers increasingly swap out their cable TV subscriptions for streaming platforms. So-called "cord cutting" has cost the industry millions of customers and left them searching for ways to successfully compete. Charter said Friday that it will acquire Cox Communications' commercial fiber and managed IT and cloud businesses. Cox Enterprises will contribute Cox Communications' residential cable business to Charter Holdings, an existing subsidiary partnership of Charter. Cox Enterprises will own about 23% of the combined company's outstanding shares. The transaction, which needs approval from Charter shareholders as well as regulators, includes $12.6 billion in debt. The proposed deal is one of the largest in over a year. Mars' announced a $30 billion deal with Kellanova last summer and Exxon Mobil's approximately $60 billion acquisition of Pioneer Natural happened in late 2023. The combined company will change its name to Cox Communications within a year after closing. It will keep Charter's headquarters in Stamford, Connecticut, and have a significant presence on Cox's Atlanta, Georgia campus following the closing. After the deal is complete, Charter CEO Chris Winfrey will become president and CEO of the combined company. Cox CEO and Chairman Alex Taylor will serve as chairman. Cox will be able to keep two directors on the 13-member board. Advance/Newhouse, which is part of Charter, will retain its two board members. The transaction is expected to close at the same time as Charter's merger with Liberty Broadband, which was approved by Charter and Liberty Broadband stockholders in February. Shares of Charter rose more than 4% before the market open. Cox is a private company.
Washington Post
16-05-2025
- Business
- Washington Post
Cable giants Charter and Cox to merge as industry faces threats on all sides
Charter Communications and Cox Communications will merge in a deal that combines two of the three biggest U.S. cable companies as their industry faces threats from cord-cutting and wireless competition. Charter, which sells its service under the Spectrum brand in many areas, would acquire Cox under the $34.5 billion agreement. Charter has more than 30 million customers, making it the second-largest U.S. cable provider behind Comcast; Cox has about 6.5 million.
CNN
16-05-2025
- Business
- CNN
Two of America's largest cable companies are merging
Two of the biggest cable companies in the United States have agreed to merge, marking a major milestone in consolidation as cord-cutters continue to ditch their pricey TV packages, thus forcing companies to adjust to their dwindling futures. Charter Communications, which operates under the Spectrum branding, is combining with its privately held rival Cox Communications, which it values at $34.5 billion including debt, the two companies announced Friday. Combining helps both of the companies on several fronts. The first is growing competition from AT&T, T-Mobile and other wireless providers, which are poaching customers with their own broadband services and packaging them with wireless plans. Plus, people are ditching their pay-TV packages for cheaper streaming options and further chipping away at the cable companies' once-lucrative bottom lines. A combined entity will help both companies compete against wireless services and improve their offerings. 'This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service, to millions of homes and businesses,' said Charter CEO Chris Winfrey in a statement. Charter's (CHTR) stock jumped more than 6% on the news and is one of the few cable companies to have a decent year, rising about 22% since January. The company keeps adding more mobile users, making up for their losses in cable subscribers. Cox is the largest division of Cox Enterprises, which is a family-owned firm founded in 1898 and has stakes in cable, automotive and media companies. The combined company will be called Cox Communications, but Spectrum will be the consumer-facing name. The headquarters will be located at Charter's offices in Stamford, Connecticut, with a 'significant presence' at Cox's campus in Atlanta. The transaction is contingent on regulatory approval and could be a litmus test for President Donald Trump's views on major companies combining.
