Movies

Cable giant Charter to buy Cox in a $34.5-billion deal, uniting providers that serve SoCal

BBG News

Charter Communications and Cox Communications are intending to join forces in a $34.5-billion agreement, aiming to combine as the dominant cable TV and internet service providers in Southern California. The combined company will offer their services using the Spectrum brand name.

The announced consolidation on Friday is happening because the industry is facing increasing customer losses in the cable sector, as more people are switching to streaming services instead.

Companies might experience further loss of subscribers (cord-cutting) once Disney Corporation, a longstanding programming ally, launches its ESPN sports network as an individual streaming service this autumn, making it accessible directly to viewers.

Should the charter shareholders and regulatory bodies give their approvals, the proposed merger could bring an end to a prolonged interruption in television sports broadcasting.

At long last, residents of Rancho Palos Verdes, Rolling Hills Estates, and Orange County who are Cox customers will now have access to the Dodgers’ TV channel within their service offerings. For over a decade, Cox has declined to include SportsNet LA due to its high price tag.

2013 saw Charter Television secure the rights to broadcast the Dodgers channel as part of an $8.35-billion contract with the team’s ownership. Despite this agreement causing Charter significant financial losses amounting to hundreds of millions, they have now made the channel more accessible by providing it via a streaming app to a wider audience.

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Based in Atlanta, Cox ranks as the third largest cable provider in the U.S., serving over 6.5 million clients for digital cable, internet, phone services, and home security. In contrast, Charter Communications, headquartered in Stamford, Connecticut, boasts more than 32 million customers nationwide.

In the year 2016, Charter significantly bolstered its Los Angeles operations by purchasing Time Warner Cable for over $60 billion.

By merging, the Charter-Cox partnership would cover approximately 38 million residential customers across the nation, surpassing the cable market presence that Comcast Corporation of Philadelphia has held for some time.

As a movie enthusiast, I’m thrilled about this game-changing deal that will shape us into the top dog in the mobile and broadband communication services, as well as uninterrupted video streaming industry. This was the message I shared during our recent chat with financial analysts.

Winfrey would become the proposed entity’s CEO.

The primary reason behind this agreement is to merge our operations in Los Angeles, Orange, and San Diego counties, where we already provide services, as well as expand into enticing markets such as Phoenix. This was the information shared with analysts by [Company Name].

In simple terms, Winfrey stated that our network is planned to cover about 46 states, reaching almost 70 million households and businesses in total.

Cox Corporation is not publicly traded; instead, it’s owned by the affluent Cox family, who trace their roots back to an Ohio newspaper magnate from the late 19th century. This family started expanding into cable systems in 1962 and has maintained a firm control over them ever since. Over the years, the Cox cable holdings have been viewed as an attractive acquisition target.

In the previous year, Cox recorded a total income of approximately $13.1 billion and an adjusted profit of around $5.4 billion before accounting for interest, taxes, depreciation, and amortization expenses.

In a recent report, longtime cable analyst Craig Moffett stated that Cox was often the suggested option in merger discussions, but was also quickly ruled out as an option, as “Cox wasn’t available for acquisition.

Until it was.

Surprisingly, after the deal is finalized, the newly combined entity will adopt the name Cox within a year. Yet, their products will continue to bear the Spectrum branding.

Approximately a quarter of the total shares issued by the merged company are owned by the Cox family, making them the majority shareholders.

Charter shares got a slight bump on Friday’s news, climbing nearly 2% to $427.25.

Chris Marangi, co-chief investment officer of value at Gabelli Funds in New York, stated that being a scale business will enable Charter to more effectively compete against larger telecommunication companies, tech firms, and Elon Musk’s Starlink due to the extra size they acquire.

Hollywood Inc.

As a movie enthusiast, let me share some exciting news that transcends the ongoing industry disputes between the WGA and SAG-AFTRA. The recently resolved Disney-Charter agreement has brought an end to the blackout, signifying a significant breakthrough in our beloved cinematic world. This deal is definitely worth discussing!

Incorporating the Cox properties enables Charter to broaden the reach of its news channel, Spectrum News, based in El Segundo.

As a devoted cinephile putting it in my own words, here’s how I’d rephrase that statement: Charter Communications announced its plan to take over Cox’s commercial fiber, IT, and cloud services. In response, Cox Enterprises consented to transfer their residential cable business to Charter Holdings.

In a deal worth approximately $20 billion, Cox Enterprises stands to receive $4 billion in cash and around $6 billion in convertible preferred units that can potentially be swapped for Charter shares. The Cox family will also gain about 33.6 million common units in the Charter Holdings partnership, valued at nearly $12 billion each.

The combined entity will absorb Cox’s $12 billion in outstanding debt.

Hollywood Inc.

14.8 million households with Charter Spectrum as their service provider are currently experiencing a significant outage on channels like ESPN, ABC, FX, and others that fall under Disney’s ownership due to ongoing negotiations between the two companies.

According to Alex Taylor, a descendant of the company’s founder and current CEO of Cox Enterprises, Charter’s skill in navigating difficult terrains played a role in the family’s choice-making process. This was communicated to financial analysts.

Taylor praised Charter particularly for their effective use of capital,” he said. “Over the past five years, they’ve invested more than $50 billion in upgrading internet infrastructure and creating a wireless phone network.

According to the cable expert, Moffett, this agreement initiates with mobile services. Cox, having entered the wireless arena later than others, implies a significantly larger potential for growth in their service area.

The companies said they could wring about $500 million a year in annual cost savings.

The combined company would have about $111 billion of debt.

Awards

Approximately four months following Charter Communications’ purchase of Time Warner Cable, the corporation has decided to formally retire the frequently criticized Time Warner Cable brand.

In a 13-person board, Cox would appoint two representatives, one of whom, Taylor, would hold the position of chairman.

In simple terms, Advance/Newhouse will retain its two representatives on the board. They are also set to own approximately 10% of the shares in the newly formed company.

As a movie buff, I’m excitedly anticipating that our deal will seal concurrently with Charter’s merger with Liberty Broadband, an agreement that received the green light from both Charter and the shareholders of Liberty Broadband in February.

After the consolidation, Liberty Broadband will no longer be a direct Charter shareholder.

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2025-05-17 02:02

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