The long-sought-after acquisition, announced early Tuesday, values Time Warner Cable at $56.7 billion. Charter also is planning to purchase Bright House Networks, a smaller cable provider, producing a new company with more than 20 million pay TV, Internet and phone subscribers in 41 states.
The deal will need federal and state government approval. However, it is considered more likely to clear regulatory hurdles than
That's partly because the combined company would be smaller than the proposed merger of Comcast and Time Warner Cable.
Tom Wheeler, chairman of the
"In applying the public interest test, an absence of harm is not sufficient," he said. "The commission will look to see how American consumers would benefit if the deal were to be approved."
Charter, backed by cable pioneer John Malone's Liberty Media Corp., had previously structured a $10.4-billion deal to purchase the privately held Bright House Networks, which has more than 2 million subscribers.
The flurry of high-profile deals delivers on Charter's ambitions to quickly transform itself into one of the nation's most powerful Internet service and cable TV providers. The move also represents a triumph for Malone, who was a key architect of the cable TV industry as it consolidated in the 1990s.
The Colorado billionaire has kept his eye on Time Warner Cable for the last two years. It first appeared that Malone and Charter had been outmaneuvered by their longtime rivals at Comcast, but when that deal collapsed last month, Charter quickly swooped in.
With the Time Warner Cable and Bright House subscribers added to the mix, Charter would wield considerable clout -- including more than 19 million high-speed Internet customers nationwide, 17.3 million cable TV customers, and a growing portfolio of commercial customers who sign up for phone and Internet service.
Charter will command a colossal footprint in Southern California, with more than 2 million customers in Los Angeles, Riverside, San Bernardino, Orange, San Diego, Ventura and Santa Barbara counties.
The proposed union of two of the Southland's biggest cable companies also has the potential to break the logjam in the long stalemate over distribution of the Los Angeles Dodgers' television channel.
As a goodwill gesture, Charter could quickly begin carrying the SportsNet LA channel, which is owned by the Dodgers, for its current customers in Southern California.
Such a move would enable baseball fans in Glendale, Malibu, Burbank, La Cañada Flintridge, Long Beach and other areas currently served by Charter to watch Dodgers games on SportsNet LA.
Time Warner Cable has been the only major distributor in Southern California to carry the network since it launched at the start of the 2014 baseball season.
Charter and other pay-TV providers, including DirecTV and Dish Network, had steadfastly refused to distribute the channel, citing what they said are high fees.
Charter on Tuesday did not immediately say whether it planned to begin carrying the network, but the company said it would offer other benefits, including slightly lower monthly rates to Time Warner Cable consumers.
Charter and Time Warner Cable executives began negotiating the proposed merger soon after federal regulators signaled in late April that they would seek to block Comcast's attempted $45-billion takeover of Time Warner Cable.
"Compared to the Comcast deal, I don't think this one is likely to face nearly as much resistance," Gene Kimmelman, president and chief executive of the public interest group Public Knowledge, said in a phone interview Monday after news of the deal leaked out.
"This proposed merger isn't nearly as big. ... But there still will be important issues for the FCC to consider," Kimmelman said.
At the end of last year, Stamford, Conn.-based Charter had 6.2 million customers that opted for its Internet service, phone service or cable TV packages, or a combination of the three. It currently ranks as the nation's fourth-largest cable operator.
Time Warner Cable is much bigger. The nation's second-largest cable TV provider has more than 11 million customers nationwide, including 1.5 million customers in Southern California.
Charter is hoping to complete the merger by the end of the year. The combination also would give Charter a commanding presence in the New York, Dallas, Tampa, Orlando and Cleveland markets.
The deal has a built-in $2-billion breakup fee that Time Warner Cable would receive if the transaction falls apart.
The FCC and Justice Department had major problems with Comcast's proposed purchase of Time Warner Cable, which led the companies to abandon it last month.
But Rutledge and Marcus said their proposed deal would create a company that would not be as dominant as Comcast/Time Warner Cable, which would have controlled about 57% of the high-speed broadband market.
Charter, after the Time Warner Cable and Bright House deals, would have less than 30% of the broadband market. And the company would not control programming, as Comcast does with its ownership of NBCUniversal.
"We're a very different company than Comcast and this is a very different transaction," Rutledge said.
Charter first approached Time Warner Cable executives in mid-2013 about the prospects of a union. Time Warner Cable rebuffed Charter's offer of about $133 a share, and then reached out to Comcast as its preferred partner.