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You may not have heard of Charter Communications before it announced its intention to buy Time Warner Cable for $55 billion. Charter hopes the deal will raise its profile at a time when Americans' TV habits are changing, but the deal has to be approved by federal regulators who just a month ago rejected another deal involving Time Warner. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Charter is actually smaller than the company it's gobbling up, Time Warner Cable, and it's not exactly a leading player in the industry. But it does have one marquee name attached to it. The company is controlled by billionaire John Malone, a cable pioneer who's been looking to get back into the business in a big way. So when federal regulators essentially killed the proposed merger between Comcast and Time Warner Cable last month, Malone swept in with a generous offer of his own. The new company would have 23 million customers, and it would be a big power in cable and Internet services. Craig Aaron has the advocacy group Free Press.
CRAIG AARON: If anybody wants to do business - launch a channel, have national reach - they're going to have to deal with, essentially, two companies - Comcast and, if this deal were to go through, New Charter. They would have a lot of power over what we see and read and download every day.
ZARROLI: The deal comes at a time when big cable TV companies are seeing their core business come under attack. Companies such as Netflix and HBO are offering programming over the Internet, and a growing number of consumers are canceling their cable and satellite TV services altogether. Increasingly, cable companies make much of their revenue by offering high-speed Internet services to businesses and consumers.
AARON: It's sort of a license to print money. Everybody wants high-speed Internet. We're addicted to it, and we want more and more and more because of all the great things it allows us to do.
ZARROLI: The merger will make Charter a much bigger player in broadband, but first it needs to get past regulators. Last month, the Justice Department essentially killed off a proposed merger between Time Warner Cable and Comcast, saying it would hurt competition. This deal would be a lot smaller than that, and unlike Comcast, Charter doesn't own a lot of programming sources. Charter Chief Executive Tom Rutledge, who would head the new company, told CNBC this morning that he believes regulators won't have any problem with this merger.
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TOM RUTLEDGE: As a place for development and creativity in the industry, we'll be a source of good for the country and a source of good to our employees and a source of good to our shareholders, so I think it's just a very different transaction.
ZARROLI: But the deal also has to be approved by the Federal Communications Commission, which will require Charter to prove that the deal was good for the public. Kate Forscey of the group Public Knowledge says the FCC will want to know what will happen to cable prices and Internet speeds.
KATE FORSCEY: So if we're going to have further consolidation in an already consolidated service marketplace, we need to have the answers to these types of questions, and that burden is now to going to be on the Charter folks to demonstrate.
ZARROLI: For Time Warner and Charter, there is some reason for optimism. The head of the FCC, Tom Wheeler, has said just because the Comcast merger was struck down, doesn't mean the government is opposed to all mergers. But regulators were noncommittal about today's deal, saying simply that they plan to study it. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.
