Comcast to shed 3.9M subscribers to hasten TWC deal
The company will sell customers to competing cable companies, including Charter Communications, which would become the second-largest cable provider in the country.
Comcast and Charter Communications have signed a deal with the intent of improving Comcast's plan to acquire Time Warner Cable.
Comcast has agreed to divest itself of 3.9 million customers from its to-be-merged corporation with Time Warner Cable, the company announced Monday. Charter Communications, which at the moment has 4.4 million residential and commercial video customers, will stand to gain the 3.9 million customers in the deal.
Time Warner Cable and Comcast announced a $45 billion merger agreement earlier this year. Under the terms of the deal, Time Warner Cable would essentially become part of Comcast, and the combined companies would serve around 30 million video customers around the US.
When Comcast announced the deal in February, it said that it would divest itself of approximately 3 million subscribers. The new increase is perhaps a nod to some of the antitrust concerns that are popping up from critics who say the combined companies will have too much power over the cable industry and consumers.
The deal proposed Monday would only become official if the merger between Comcast and Time Warner Cable is approved. According to Comcast, the combined company, after this latest deal is completed, would serve less than 30 percent of video customers in the US -- an important figure as it tries to shake off claims that it'll control too many households across the country.
In order to make the Charter deal happen, quite a bit will occur. After the merger agreement with Time Warner Cable is completed, Comcast will divest itself of 1.4 million Time Warner Cable customers to Charter in return for cash based on earnings at that time.
Comcast will also form a new, independent and publicly traded company that will serve 2.5 million existing Comcast customers. That company, yet to be named, will be partly owned by Comcast shareholders, have a full board of directors, and serve customers in the Midwest and South. Charter, which will own one-third of that company, will provide operational support to those customers.
Comcast has not said what customers will be most heavily affected by the proposed transaction, and it's not clear from the announcement what Time Warner Cable customers will find themselves calling on Charter for services.
CNET has contacted Comcast for comment. We will update this story when we have more information.