- Judge recommends approval to California utilities commission
- Vote by full California Utilities Commision may come May 12
Charter Communications Inc.’s proposed merger with Time Warner Cable Inc. cleared an important hurdle Tuesday as an administrative law judge recommended California regulators approve the deal, which appears to be nearing federal clearance too.
Shares of both companies rose in morning trading Wednesday. The difference between Charter’s offering price for Time Warner stock and its current trading range also narrowed further, indicating growing investor confidence in the deal.
Administrative Law Judge Karl Bemesderfer, in a decision distributed by e-mail, recommended approval by the California Public Utilities Commission in a vote that could take place May 12. Charter needs to convert all households to fast, digital broadband service within 30 months, comply with federal open-Internet rules regardless of the outcome of court challenges, and forbear from imposing limits on customers’ data usage for three years, Bemesderfer said in the proposed decision.
California is the last state where the merger needs approval. Charter’s service would be available to nearly 6.4 million households in California, and the company would serve 87 percent of cable video subscribers in the Los Angeles market, according to testimony before the California agency.
“We are pleased the regulatory process is moving forward and will continue our productive engagement at the California Public Utilities Commission,” Tamara Smith, a Charter spokeswoman, said in an e-mail.
With the merger, Stamford, Connecticut-based Charter would almost quadruple its cable subscribers, gaining 12 million customers in cities including New York, Los Angeles and Dallas. The combined business would have about 17 million basic cable customers, compared with top U.S. cable provider Comcast Corp.’s 22 million.
Charter shares rose 1.3 percent, to $202.80, at 12:44 p.m. and Time Warner Cable was up 1.2 percent to $205.15.
Critics, including Dish Network Corp., which offers streaming video, told the California commission that Charter would be able to interfere with rival programming delivered over the Web. Charter told the state agency “there is no reason to be concerned” because the company views third-party services as keys to growth in demand for broadband service it sells.
The merger needs approval from the Federal Communications Commission and antitrust officials at the Justice Department, and Web policy has figured prominently in the Washington debate. Charter Chief Executive Officer Tom Rutledge met April 6 with Federal Communications Commission Chairman Tom Wheeler and discussed extending broadband to new customer locations, as well as Charter’s commitments to let Web companies such as video provider Netflix Inc. connect to its network without charge.
It was Rutledge’s second meeting at the FCC within a month. Experts in Washington believe the deal review is in final stages, with discussions focused on the length of time for broadband conditions, New Street Research said in a note today without identifying the experts. Charter has offered conditions of three years’ duration. It’s likely terms for conditions will be set at five to seven years, New Street Research said.
Kim Hart, an FCC spokeswoman, declined to comment as did Bobby Amirshahi, a spokesman for Time Warner Cable.
When the deals were announced in May, Charter agreed to acquire Time Warner Cable and Bright House Networks LLC for $55.1 billion and $10.4 billion, respectively.