FT: Comcast And Time Warner In Talks To Sell 3 Mln Subscribers To Charter

(RTTNews) - Cable television operator Comcast Corp. (CMCSA, CMCSK) and Time Warner Cable, Inc. (TWC) are in early stage talks to sell three million of their subscribers to smaller rival Charter Communications, Inc. (CHTR) in a deal valued at up to $20 billion, according to a Financial Times report on Sunday.

The move is part of Comcast's commitment to divest systems serving about 3 million managed subscribers in order to reduce competitive concerns over its acquisition of Time Warner Cable, the second largest cable operator in the U.S. Comcast would finally have to divest some more of its assets to gain antitrust approval for the deal.

The companies are also reportedly discussing the mode of selling the subscribers. It could be a direct sale or through a spin-off to a new company and then selling a large minority stake in the new company to Charter, which also had a bid on the table for Time Warner Cable. Other cable firms are also said to be in the fray to buy Comcast's subscribers.

Following the reported sale pf three million subscribers, Comcast and Time Warner will still control a third of the total U.S. market with a total of nearly 30 million cable subscribers. Meanwhile, Charter will still be a distant second with a total of about 5.5 million cable subscribers.

Comcast, the largest cable operator in the U.S., agreed in mid-February to acquire Time Warner Cable for $45.2 billion in an all-stock friendly merger deal. However, the recent drop in Comcast's share price has reduced the deal value to about $40 billion, based on Comcast's closing share price of $49.10 on Thursday.

Comcast trumped a takeover attempt made for Time Warner Cable earlier by Charter Communications, the fourth-largest cable operator in the U.S.

In mid-January, Charter, backed by billionaire John Malone's media holding company Liberty Media Corp. (LMCA), reportedly offered to acquire Time Warner Cable in a cash and stock deal valued at about $61.3 billion, including debt. Time Warner Cable rejected the offer a day later.

CMCSA closed Thursday's regular trading session at $49.10, down $0.07 or 0.14% on a volume of 15.14 million shares, TWC closed at $135.33, down $0.29 or 0.21% on a volume of 2.28 million shares, and CHTR closed at $117.83, down $0.28 or 0.24% on a volume of 1.73 million shares.