Charter-Cox $34.5 Billion Deal Leapfrogs Comcast As New Cable Giant

Charter Communications has agreed to acquire Cox Communications in a blockbuster merger that will create the largest cable TV and broadband provider in the U.S., surpassing Comcast.

The transaction values Cox Communications at $34.5 billion, including $21.9 billion in equity and $12.6 billion in net debt and other obligations. According to a press release, the valuation aligns with Charter’s enterprise value-to-2025 estimated Adjusted EBITDA multiple of 6.44x. 

Charter, the second largest publicly traded cable company behind Comcast, was up 3% in premarket trading in New York from its Thursday close of $419.57. The Cox family privately holds Cox. 

Charter will acquire Cox’s commercial fiber, IT, and cloud businesses and contribute Cox’s residential cable assets to Charter Holdings. 

Cox Enterprises will become the largest shareholder of the combined entity’s fully diluted shares outstanding with a 23% stake and have seats on the board. 

“This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service, to millions of homes and businesses,” Chris Winfrey, President and CEO of Charter, said in a statement.

Winfrey said, “We will continue to deliver high-value products that save American families money, and we’ll onshore jobs from overseas to create new, good-paying careers for U.S. employees that come with great benefits, career training and advancement, and retirement and ownership opportunities.” 

The combined company will remain headquartered in Stamford, Connecticut, and keep a “significant presence on Cox’s Atlanta, GA campus following the closing,” according to the press release.

The merger with Cox follows Charter’s announcement of an all-stock acquisition of Liberty Broadband, with both transactions expected to close concurrently.

Charter expects $500 million in annualized cost synergies within three years of closing the deal. 

Bloomberg added context to the merger, describing it as part of an escalating “turf war” in the telecom industry:

Cable and phone companies have been engaged in an intense turf war, seeking to win over customers in areas that others have dominated. Cable providers have been selling their own mobile phone plans by leasing network access from major carriers. At the same time, phone carriers have been poaching home internet subscribers from cable companies.

The bet is that customers will in the future prefer to buy their internet and mobile phone services from the same provider — a trend referred to as convergence. A combination of Charter and Cox would position them to better compete in that environment by allowing them to bundle offerings and more efficiently invest in infrastructure.

Bloomberg Intelligence analysts noted:

“Charter is aggressively marketing its converged mobile fixed bundles at competitive rates to improve subscriber acquisition and retention.

“Regardless, the entire cable sector is being hurt by intensifying telecom competition from both fiber coverage and fixed wireless access.”

Axios pointed out:

Some layoffs are expected to result from the merger. Other Cox Enterprises businesses, including Axios and Autotrader, are not directly impacted.

Just like that, the combined entity is set to become America’s largest cable TV and broadband provider. 

Recall one of the heirs to the Cox empire is a far-left radical…  

Fergie Chambers is the heir to the Cox Media empire. He is also a devoted Communist and a fan of Mao (see tattoo on his thigh). He is spending his fortune from capitalism on a proletariat Revolution to overthrow capitalism.

How was he introduced to Communism? By a history… pic.twitter.com/V0KeJutqr7

— Xi Van Fleet (@XVanFleet) December 7, 2023

Sigh.