The U.S. Justice Department approved the buyout of Time Warner Cable Inc. and Bright House Networks by Charter Communications Inc. The approval featured anti-trust conditions that would ensure the merger does not stifle competition.
Charter Communications to Buy Time Warner Under Strict Anti-trust Conditions
The approval by the Justice Department and the buyout come in the heels of diminishing return from pay television as a result of online streaming rivals such as Hulu and Netflix.
Other than the Justice Department, the Federal Communications Commission is required to approve the buyout agreement too.
According to the Justice Department, Charter Communications agreed not to prevent its content providers from selling their content online.
In a court filing, the Justice Department said, “Continued growth of web video offers more choices and allows consumers to customize their consumption of online video content to their budgets and preference. Online video continues to expand the competitive landscape.”
Tom Wheeler, FCC chairperson, said the agency approved the merger on condition that it will have direct benefits to consumers by encouraging competition in the video market and expanding broadband distribution.
If the deal is approved, Wheeler added, Charter would need to distribute high speed internet access to an additional two million customers in the next five years. One million customers need to be served by a competitor broadband provider.
In addition, Charter would have to refrain from charging usage prices or imposing caps on data. The company would also not be permitted to charge interconnection fees, including to video content providers.
According to Charter, the buyout is valued at $56.7 billion to purchase Time Warner Cable, not including debt, and 10.4 billion to buy Bright House Networks.
Shareholders have approved the deal with the only pending approval being by the public utilities commission in California.
Billionaire James Malone, owner of Liberty Media Corp and a major backer of Charter Communications has been pursing Time Warner Cable since 2013, with Time Warner consistently rejecting unsolicited offers from Charter.
Charter and Warner however resumed talks and agreed to a cash and stock buyout in May last year.