Verizon Exploring Combination With Cable Firm Charter Communications -- Update
27 January 2017 - 1:55AM
Dow Jones News
By Shalini Ramachandran, Ryan Knutson and Dana Mattioli
Verizon Communications Inc. is exploring a combination with
Charter Communications Inc. that would unite two giants in search
of growth in a rapidly consolidating media and telecom landscape,
according to people familiar with the matter.
Verizon CEO Lowell McAdam has made a preliminary approach to
officials close to Charter and Verizon is working with advisers to
study a potential transaction, the people said, though there's no
guarantee a deal will materialize.
It is unclear whether Charter executives, including Chief
Executive Tom Rutledge, would be open to a transaction. The effort
could be complicated by Charter's ownership structure, which
includes cable tycoon John Malone and the Newhouse family.
A combination would bring together Verizon's more than 114
million wireless subscribers and what remains of its landline
business with Charter's cable network, which provides television to
17 million customers and broadband connections to 21 million.
Verizon has a market capitalization of $194 billion and more
than $100 billion in debt, while Charter ended Wednesday's session
valued at about $85 billion.
Both Verizon and Charter face challenges to their core
businesses. Growth in the U.S. wireless market has slowed and
pricing pressure has chipped away at profits. Furthermore, the
cable-TV business is threatened by cord-cutters and over-the-top
video services.
Any transaction would face a close regulatory review, given the
sheer size of the businesses and some overlapping services. Both
companies provide home broadband and television services in certain
markets, including the greater New York area. On its fiber-optics
network, known as Fios, Verizon has about 5.7 million high-speed
internet customers and 4.7 million TV subscribers, primarily in the
Northeast.
It would pose a big test for new antitrust enforcers under the
administration of President Donald Trump, who during the campaign
expressed concerns about media consolidation. In October, he vowed
to block AT&T Inc.'s $85.4 billion purchase of Time Warner
Inc., saying it put too much power in the hands of too few, but he
hasn't spoken publicly on the transaction since the election.
Many deal makers are hopeful a more traditional Republican
administration will be merger friendly. Mr. Trump recently
appointed Ajit Pai, a Republican, as chairman of the Federal
Communications Commission, which oversees telecom mergers in
addition to the Justice Department.
In his testimony before the Senate, Mr. Trump's selection for
Attorney General, Sen. Jeff Sessions, said he wouldn't have a
problem blocking mergers deemed anticompetitive. "I have no
hesitation to enforce antitrust law," Sen. Sessions said on Jan.
10. "There will not be political influence in that process."
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com,
Ryan Knutson at ryan.knutson@wsj.com and Dana Mattioli at
dana.mattioli@wsj.com
(END) Dow Jones Newswires
January 26, 2017 09:40 ET (14:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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