By Angela Chen
Charter Communications Inc. agreed to buy cable operator Bright
House Networks LLC for $10.4 billion in cash and stock, the latest
deal in a rapidly consolidating pay-television industry.
Bright House is the sixth-largest cable operator in the U.S. and
serves approximately 2 million video customers in central Florida,
as well as Alabama, Indiana, Michigan and California.
Charter is the country's fourth-largest cable operator said it
would become the second-largest cable operator after the deal.
Shares of Charter jumped 6.7% to $195.59 in premarket trading.
"Bright House Networks provides Charter with important
operating, financial and tax benefits, as well as strategic
flexibility," Charter Chief Executive Tom Rutledge said in a news
release.
Connecticut-based Charter has struggled as consumers have turned
away from more-traditional forms of pay television toward
Internet-based entertainment services such as Netflix and Amazon
Prime. It had earlier sought to purchase Time Warner Cable, which
had a long-standing arrangement to handle programming and
technology acquisitions for the Bright House.
The merged business will be conducted through a partnership that
Charter will own 73.7% and Advance/Newhouse--the parent company of
Bright House Networks--will own the rest.
The Bright House cable systems are part of the Newhouse family's
media empire, which also includes publisher Advance Publications
Inc. as well as an interest in Discovery Communications Inc.
In addition, Liberty Broadband Corp. has agreed to purchase $700
million of shares in the new company after the deal closes, with
equity ownership totaling about 19.4% of the shares outstanding,
out of the 26.3% owned by Advance/Newhouse.
Advance/Newhouse has agreed to grant Liberty Broadband a voting
proxy on its shares, capped at 6%, for the five years following the
close of the transaction, such that Liberty Broadband would have
total voting power of about 25% at closing.
Write to Angela Chen at angela.chen@dowjones.com
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