Charter Communications and Cox Communications have agreed to merge for $21.9billion. This will combine two of the biggest cable and broadband companies in the US, as they battle the increasing competition from mobile carriers and streaming platforms.
This deal brings back a merger which was considered over a decade earlier but eventually abandoned.
Cable operators are under increased pressure since then. Wireless providers lure broadband users with aggressive pricing, and millions of homes have abandoned traditional pay-TV for streaming services.
Charter and Cox market share combined
Charter will be able to bring its 30 million customers together with Cox’s 6.5 millions residential and business users.
Charter covers 41 states, and more than 57 millions homes and businesses. Cox is available in 18 states.
After the merger, Cox Communications will be the dominant player in the sector of broadband.
Charter is keeping its Spectrum brand for consumers, including cable, mobile, broadband and other offerings.
Charter had 12.7 millions cable subscribers at the end of Q1 and 10.5 million mobile phones.
During the third quarter of 2016, it lost 181,000 television customers and 60,000 broadband subscribers, reflecting the industry-wide shift away from traditional TV packages.
Cox began providing mobile services to its customers in 2023 and generated revenues of $12.6 billion by 2020.
In a market that is saturated and constantly changing, both firms are increasingly turning to bundle strategies for mobile devices to keep users.
Plans for ownership structure, management and integration
Cox Enterprises will hold 23% of all fully-diluted shares in the new entity.
Charter Communications, which will maintain its Stamford headquarters, will continue to be the largest shareholder. The combined company, however, will have a large operational presence in Atlanta and preserve Cox’s regional presence.
Charter’s Chris Winfrey will be the new CEO of the combined firm, and Alex Taylor, Cox Enterprises Chairman and CEO will act as the chairman of the Board.
Cox will retain influence by having the power to nominate two members of the board. A second Cox executive will also be joining the board.
Cox Communications will be the new name of the combined entity within one year after the transaction closes. Charter Spectrum is to remain as the retail branding.
Value of strategic value and anticipated cost synergies
Charter estimates that the merger would generate annualized cost synergies of around $500,000,000 within three years.
The savings will be a result of shared infrastructures, simplified operations and integration across platforms, especially in bundles for mobiles and broadband.
This agreement is designed to be completed at the same time as Charter merges with Liberty Broadband. It simplifies John Malone’s cable holdings. Liberty and Charter’s shareholders approved the Liberty merger in February.
Charter will consolidate its position as second largest publicly-traded cable operator in America, after Comcast.
Both companies are still facing competition, however, from satellite broadband and fixed wireless operators, as well as telecoms investing in 5G.
Charter’s merger with Cox allows it to offer more services bundled together, while also leveraging its larger customer base in order to adapt to changes in technology and consumer demands.
As new information becomes available, this post Charter and Cox merge to create mega-deal to compete with streaming giants and wireless giants could be updated.
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