Time Warner Cable subscribers in Ohio ultimately will become Charter Communications customers as part of a series of transactions announced Monday by Comcast.
The transactions are designed to lower Comcast's debt and help clear the way for its acquisition of Time Warner Cable, including the sale of cable systems with 1.4 million subscribers to Charter and the spinoff of an additional 2.5 million subscribers into a new company.
The about 2.5 million subscribers will be part of a new publicly traded cable provider that Philadelphia-based Comcast is creating and spinning off.
In Ohio, all of Time Warner's operations are going to Charter, including Dayton, Springfield, Cincinnati and Cleveland, company officials said Monday. The process for the divestment of those and other Time Warner markets in Ohio has not yet been determined.
Included are all the Northeast Ohio subscribers to Time Warner, as Charter takes the Time Warner/Comcast homes in Ohio, Kentucky, Wisconsin, Indiana and Alabama markets.
The Time Warner division serving Northeast Ohio is the company's third largest, with close to 600 employees in Summit County, including the regional division headquarters in Akron.
"This morning's announcement is a win-win-win and moves us one step closer to completing our merger with Comcast," Mike Pedelty, a Time Warner Cable spokesman. "We're pleased that the parties have reached agreement and look forward to working with Comcast and Charter to make all of the transactions as seamless as possible for our employees and our customers."
Charter Communications Inc. will form a new holding company that will own about a third of the Comcast spinoff, while shareholders of Comcast and the former Time Warner Cable will own the remaining 67 percent of the new company.
In February Comcast Corp.'s $45.2 billion bid for Time Warner Cable Inc. topped Charter's offer.
Comcast said that the transactions will give it less than 30 percent of homes that subscribe to cable or satellite TV in the U.S. after its combination with Time Warner Cable closes.
Comcast said in an investor presentation that it puts the deals' initial value to Comcast shareholders at $19.5 billion.
Charter said the acquisition of the Time Warner Cable subscribers will boost its residential and commercial video customer base to about 5.7 million from 4.4 million. Charter and Comcast will also exchange about 1.6 million customers.
Charter estimates that the acquisition of the cable systems will cost approximately $7.3 billion. It estimates the value of the spinoff company at about $14.3 billion.
Charter President and CEO Thomas Rutledge said during a conference call that the transactions will help broaden Charter's footprint in the Midwest and Southeast. The Stamford, Conn., company will acquire systems in Ohio, Kentucky, Wisconsin, Indiana and Alabama. It will also shed systems in California, New England, Tennessee, Georgia, North Carolina, Texas, Oregon, Washington and Virginia.
Rutledge said the new footprint will give Charter access to significantly underpenetrated areas and also will be easier to operate.
The spinoff company Comcast is creating will own systems adjacent to Charter systems in Michigan, Minnesota, Indiana, Alabama, Eastern Tennessee, Kentucky and Wisconsin.
Comcast said that the new cable provider it is creating and spinning off will have a nine-member board. That will include six independent directors and three appointed by Charter. Comcast itself will have no ownership stake in the spun off company and will have no role in managing it. Charter will manage the new company.
Both Comcast and Charter's boards have approved the transactions, which are subject to Comcast's deal with Time Warner Cable closing, approval by Charter shareholders and other conditions. Time Warner Cable's board has also signed off on the deal.
Comcast plans to use proceeds from the transactions to lower its debt. It still anticipates its combination with Time Warner Cable bringing about $1.5 billion in operating savings. The combination is targeted to close by year-end.
Shares of Charter added $1.99 to $132 in morning trading, while Comcast's stock rose 28 cents to $51.25.
By Dave Larsen - Dayton Daily News, Ohio(MCT)
(c)2014 the Dayton Daily News (Dayton, Ohio)
Visit the Dayton Daily News (Dayton, Ohio) at www.daytondailynews.com
Distributed by MCT Information Services