April 22 Comcast may divest about 4
million subscribers after its merger with Time Warner Cable
and is working to reach an accord to sell a portion of
those customers to Charter Communications, a source
familiar with the matter said Tuesday.
Comcast is studying what could be a two-phase process, where
Charter would first acquire up to 1.5 million subscribers
directly from Comcast, the source said on condition of anonymity
because discussions were continuing and a final agreement had
not been struck.
Comcast would then spin off the rest of the 2.5 million
subscribers into a separate, publicly traded company, which
Charter would take a minority stake in, the source added.
The roughly 4 million subscribers are worth between $18
billion and $20 billion, said the source.
Comcast and Charter would also swap about 1 million cable
subscribers, including Charter's subscribers in Los Angeles. It
was not yet clear what markets Comcast would swap with Charter
or spin off, although the companies would likely trade
subscribers adjacent to their exisiting markets.
Any agreement the companies reach would be contingent on
Comcast's $45.3 billion acquisition of Time Warner Cable being
approved by regulators, a process that could take many more
months while the Justice Department and U.S. Federal
Communications Commission study that deal.
While the source characterized the negotiations as serious,
the deal could still fall apart and other cable companies and
private equity firms may be interested in the divestitures.
Representatives for Comcast and Charter declined to comment.
The Wall Street Journal and Bloomberg both reported parts of
the deal earlier on Tuesday.
Comcast and Charter originally teamed up last year to try to
find a way to carve up Time Warner Cable. But talks soured as
the two bickered over price and the feasibility of engineering a
split of the No. 2 U.S. cable operator.
Charter, backed by billionaire John Malone's Liberty Media
Corp, had pursued Time Warner Cable for months before
Comcast swooped in with a surprise bid.
Comcast's chief financial officer, Michael Angelakis, said
on Tuesday there was no timeline governing when the company will
make a decision regarding the divestitures.
Speaking on a conference call following Comcast's
better-than-expected earnings, the CFO said the company was
studying a "number of potential structures" and wants to pursue
divestitures in the "most tax-efficient way possible.
Any cash proceeds from a spinoff or sale would be used for
returning capital to shareholders, he said.
(Reporting by Liana B. Baker; Editing by Bernard Orr)