Stay informed with free updates by signing up for the Media myFT Digest, delivered directly to your inbox.
Charter has recently announced a groundbreaking $34.5 billion deal to acquire Cox, creating a powerhouse in the cable industry by combining two of the largest companies in the US. This strategic move will give them a significant presence spanning from the New York area to southern cities like Atlanta.
The deal comes at a critical time for cable television operators, who are facing increasing pressure as more viewers are cutting the cord and turning to streaming services. The transaction values Cox’s equity at $21.9 billion and gives the company an enterprise value, including debt, of $34.5 billion.
In a statement released on Friday, the companies highlighted that the deal would not only benefit their business but also bring jobs back to America. This move is likely aimed at gaining the support of US President Donald Trump, as the transaction is expected to encounter antitrust challenges.
Cox, a well-established 127-year-old family-run media empire based in Atlanta, will have its name preserved through the merger. The combined company, Charter and Cox, plans to rebrand as Cox Communications within a year of the merger’s completion.
It’s important to note that the deal only includes Cox’s communication assets, allowing the family to retain media properties such as Axios and the Atlanta Journal Constitution newspaper. As part of the agreement, Cox shareholders will receive $11.9 billion in equity, $6 billion in a convertible note, and $4 billion in cash, making them owners of about 23% of the combined company post-transaction.
Following the announcement, Charter shares experienced a 2% pre-market decline in New York. This acquisition is the latest strategic move by Charter shareholder John Malone, a prominent cable investor known as the “cable cowboy,” to consolidate the industry amidst tough competition from streaming services and high debt levels required for infrastructure investments.
Malone recently unveiled plans to merge Charter with Liberty Broadband, the largest investor in broadband operator Spectrum. The acquisition of Cox is expected to coincide with Charter’s deal to purchase Liberty, with the latter agreeing to support the combination.
Charter currently provides cable and broadband services to 57 million households across 41 states, with a network infrastructure reaching over 30 states and 12 million homes and businesses. The company anticipates annual savings of $500 million within three years, aiding in managing the $12 billion debt inherited from Cox.
Financial terms of the deal were advised by Citigroup and LionTree for Charter, with legal counsel provided by Wachtell. Cox received advice from Allen & Co, BDT & MSD, Evercore, and Wells Fargo, with legal representation from Latham & Watkins.
This transformative acquisition sets the stage for a new era in the cable industry, with Charter and Cox poised to lead the way in delivering innovative and cutting-edge services to customers nationwide. Stay tuned for more updates on this exciting development.
