Comcast, the country’s largest cable company, announced Monday that it will divest 3.9 million subscribers to regional cable operator Charter as part of a plan to ease regulatory concerns over its proposal to acquire Time Warner Cable.
The planned divestures, which have been valued at around $20 billion, call for Comcast to sell 1.4 million subscribers to Charter directly, and to create a spinoff corporation to serve 2.5 million customers that will also be owned in part by Charter. The plan also calls for a swap of existing customers, with Comcast acquiring Charter subscribers in Los Angeles and Charter acquiring Comcast subscribers in the Midwest.
The plan is consistent with what Comcast proposed in February when it announced plans to swallow its second biggest rival, Time Warner Cable.
Comcast has argued that the plan to divest subscribers should alleviate antitrust concerns over the merger, since it will mean that Comcast and Time Warner Cable will control less than 30 percent of the cable TV market if the spinoff and sale to Charter takes place.
As Om and others have argued all along, however, the cable issue is largely a red herring that does not address the real significance of the Comcast-TWC merger: new consolidation of power the merged companies will have on the broadband internet market.
The merger must still overcome regulatory hurdles from the Federal Communications Commission and the Justice Department. Comcast has suggested the deal could close by the end of the year.