Cable Giants Charter & Cox Merge in $34.5Billion Deal
The deal, which values Cox around $34.5 billion, is a test for President Trump’s antitrust enforcers. While many deal makers had expected the Trump administration to be more permissive than the Biden administration, many on Wall Street have been surprised by early signs that a tough-on-deals stance may persist.
Charter and Cox argued that the deal would help them compete against big rivals, including “larger, national broadband companies” — read: Comcast, Verizon and others — as well as satellite service providers. They are also likely to argue that their cable networks don’t significantly overlap geographically.
Charter and Cox signaled in their news release they were eager to secure the Trump administration’s approval of the deal. The announcement stated that the merger would “put America first” by bringing back customer-service jobs from abroad, echoing President Trump’s campaign rhetoric. It also underscored the value of bringing “hyperlocal, unbiased news” produced by Charter’s Spectrum News stations to Cox customers, an apparent gesture toward mollifying the White House, which has been critical of the press.
Unmentioned in the news release was Axios, a scoopy Washington-based media organization owned by Cox Enterprises, the privately held parent of the cable business as well as firms in other industries, like agriculture and cars. The release stated that the newly formed cable group will not own any national content. Cox Enterprises will hold a 23 percent stake in the new company. The group expects to cut $500 million in annual costs within a few years of closing the deal, from “typical procurement and overhead savings.”
Charter’s stock rose more than 2 percent in early trading on Friday.
It isn’t the first time the two have discussed a merger: They held talks 12 years ago, and John Malone, a telecom billionaire and major Charter shareholder, had named Cox last fall as one of the company’s potential transaction partners.
Mr. Malone, a powerful media mogul, recently made several moves to reorganize the media holdings he owns. Charter acquired Liberty Broadband last year, a telecommunications firm that was partly owned by Malone. He resigned from the board of Warner Bros. this year. The Cox-Charter acquisition is one of the largest takeovers announced in this year. It’s also a big deal that Google plans to acquire cybersecurity provider Wiz, for $32 billion. And it may show that, at least for some corporate leaders, uncertainty over the economy, driven in part by Mr. Trump’s trade policies, isn’t enough to deter them from major investments and acquisitions.
But antitrust approval is needed, and the Trump administration, which moved early to block deals like Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks, has warned corporate America not to assume that all deals will pass muster.
“I don’t have an ideological predisposition against M.&A.,” Andrew Ferguson, the chair of the Federal Trade Commission, said last month. “It does not follow, however,” he said, “that I think there should be an open season” for deals. Comcast pulled out of a bid to purchase Time Warner Cable in 2015 due to regulatory pressure from the Obama Administration. The Obama administration approved Charter’s $65.5 billion purchase of Time Warner Cable, Bright House Networks and Bright House in 2013, but placed restrictions on the deal. The cable and broadband company announced late last year it was spinning off MSNBC into a separate firm. This month, Versant was born. It is expected to debut this year.
