Comcast To Divest 3.9 Mln Customers Of Merged Comcast - Time Warner Cable

(RTTNews) - Comcast Corp. (CMCSA, CMCSK) and Charter Communications (CHTR) announced that they have reached an agreement on a series of tax-efficient transactions, whereby the combined Comcast-Time Warner Cable entity, following completion of Comcast's merger with Time Warner Cable, will divest systems resulting in a net reduction of about 3.9 million video customers.

The divestiture follows through on Comcast's willingness to reduce its post-merger managed subscriber total to less than 30 percent of total national MVPD subscribers, while maintaining the compelling strategic and financial rationale of its proposed merger with Time Warner Cable.

As per the Agreement, and following the close of the Comcast-Time Warner Cable merger, Charter will acquire about 1.4 million existing Time Warner Cable subscribers, increasing Charter's current residential and commercial video customer base from 4.4 million to approximately 5.7 million, and making Charter the second largest cable operator in the United States.

Charter and Comcast will also each transfer about 1.6 million customers respectively.

In addition, Charter will form a new holding company or New Charter that will own 100% of Charter, and acquire an approximate 33 percent stake in a new publicly-traded cable provider to be spun-off by Comcast serving approximately 2.5 million customers or "SpinCo". Charter will provide management services to SpinCo.

The Agreement has been approved by the Boards of Directors of both companies and Time Warner Cable's Board has consented to the Agreement as required under the Comcast-Time Warner Cable merger agreement.

Comcast has reaffirmed that, after taking into account the transactions with Charter, it continues to expect its merger with Time Warner Cable to generate approximately $1.5 billion in operating efficiencies.

The transactions are subject to a number of conditions, including the closing of the Comcast-Time Warner Cable merger, receipt of Hart-Scott-Rodino, FCC and other required regulatory approvals, Charter shareholder approval, and various other matters.