Two of America's largest cable companies are merging... here's what it means for prices
Two of the largest cable TV companies have agreed to merge in one of the biggest deals of the year.
Charter Communications has offered to buy Cox Communications for $34.5 billion.
The deal, which still needs approval from Charter shareholders and industry regulators, will bring together two of the top three cable companies in the U.S.
Cox, which has a strong foothold in states spanning from California to Virginia, is the third largest cable television company in the country, with more than 6.5 million digital cable, internet, telephone, and home security customers.
Charter Communications, known more widely as Spectrum, has more than 32 million customers in 41 states.
The cable industry has been in declines for years as consumers continue to switch to streaming services such as Disney+, Netflix, Amazon and HBO Max, as well as internet plans offered by mobile phone companies.
Both companies are also facing pressure from competitors such as AT&T and T-Mobile which are poaching customers with their own broadband services which they package with wireless plans.
Increased competition is likely to be the motivating factor behind the merger but could also prevent costs rising, experts explained.
The cable industry is under pressure as consumers continue to switch to streaming services
'Both Cox and Charter are seeing customer defections to mobile home internet and to streaming companies on the media side,' Neil Saunders of Global Data told DailyMail.com.
'A merger doesn’t stop that trend, but it does give them more power when buying content and in their service offerings
Despite the merger Saunders does not expect prices to rise for consumers.
'Even a merged company will have to be very conscious about the alternatives consumers now have,' he explained.
The deal means Charter will acquire Cox Communications' commercial fiber and managed IT and cloud businesses.
In exchange Cox will contribute its residential cable business to Charter.
Cox Enterprises will own about 23 percent of the combined company's outstanding shares. The transaction includes $12.6 billion in debt. 'This merger exemplifies the strategic consolidation reshaping media and telecom,' KPMG media analyst Scott Purdy told the Associated Press.
'By pooling resources, these companies will create scale, drive significant cost synergies, and strengthen their competitive positioning in a challenging market' he explained.
Charter CEO Chris Winfrey Courtesy is set to become president of the combined company
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.
The combined company will officially be called Cox Communications, but Spectrum will be the branding that consumers see.
'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,' Winfrey in a statement on Friday.
Cox's parent company Cox Enterprises has been a family-owned firm since 1898.
Its other business ventures include cars and media companies.
Fox, another major traditional cable company, recently announced plans for a new streaming service to launch before the end of the year.
The new product is not meant to challenge Fox's place in the traditional TV bundle, CEO Lachlan Murdoch said.
Murdoch said Fox does not intent to convert traditional cable TV customers into streaming subscribers of the new app.
The app will simply be packaging its existing sports and news content and does not 'expect to have any exclusive rights costs or additional incremental rights costs' Murdoch added.
