Charter Communications is set to announce on Monday morning a roughly $22 billion deal with Comcast that would bolster its subscriber base, people briefed on the matter said on Sunday.
The three-part plan, which was scheduled to be announced along with Charter’s first-quarter earnings, would allow the cable company to expand from its current largely regional presence to become the country’s second-largest cable operator.
The agreement is contingent on Comcast completing its acquisition of Time Warner Cable, which is currently the second-largest cable operator after Comcast. Charter had been trying to acquire Time Warner Cable before Comcast swooped in with a surprise $45 billion bid.
In recent weeks, Charter and Comcast have worked to resolve their tensions, however.
Announcing this deal could help Comcast win the approval of antitrust regulators, who are wary of Comcast’s growing market power. Meanwhile, Charter could seize the opportunity to leapfrog bigger competitors.
In one part of the deal, Charter would acquire about 1.5 million subscribers from Comcast directly.
Then the two companies would swap about 1.65 million subscribers, allowing each company to create more adjacencies among the areas they serve. Comcast will acquire Charter’s customers in Los Angeles, while Charter will pick up some of Comcast’s subscribers in the Midwest.
Finally, Comcast will place about 2.5 million of its current subscribers into a new publicly traded company. Charter will take a 35 percent stake in the new company, paying a mix of cash and stock. Charter will also have a path to eventually control the entirety of the new company.
Altogether, the deal was expected to deliver about $22 billion to Comcast.
