Charter Communications Inc. (Nasdaq: CHTR) chief executive officer Tom Rutledge met with top U.S. regulators a second time in the past month to discuss terms for his company’s proposed merger with Time Warner Cable Inc., as investors are showing increasing confidence the deal will win U.S. clearance.
Rutledge discussed extending broadband to new customer locations in his April 6 meeting with Federal Communications Commission Chairman Tom Wheeler and an aide, according to a disclosure filed by the company. The leaders also discussed Charter’s commitments to let Web companies such as video provider Netflix Inc. connect to its network without charge, and to refrain from setting limits on data usage.
Rutledge also met with Wheeler on March 16, when topics included expanding the company’s residential network and increasing competition in selling broadband to business customers, according to a filing.
Investors have shown growing confidence the merger will win approval. The narrow spread between Charter’s offering price for Time Warner stock and its current trading range shows the perceived risk of the deal foundering has dropped in recent months.
The meetings with the regulator show a focus on whether letting Charter become the second-largest cable provider would diminish competition in the rapidly growing market for Web video and other online services.
The deal, announced in May, would let Stamford, Connecticut-based Charter create a new cable giant serving top markets including New York and Los Angeles. Charter would almost quadruple its cable subscribers and the combined business would have about 17 million basic cable customers, second to Comcast Corp.’s 22 million.
Deal critics have said the enlarged Charter could coordinate with Comcast to squelch competition to the traditional cable bundle of channels, or to limit consumer access to standalone broadband that’s purchased without a video package.
Charter and Comcast would control 70 percent or more of U.S. broadband homes, Dish Network Corp. and allies critical of the deal told the FCC. Charter says it would reach less than 21 percent of homes served by broadband lines.
“Given the enormous threat to the growing online video market if an expanded Charter coordinates anti-competitive behavior with Comcast, we are hopeful enforcers are pressing for ironclad conditions,” Gene Kimmelman, president of the Washington-based policy group Public Knowledge, said in an e-mail.
FCC consideration has stretched 18 days beyond an informal 180-day goal for deciding mergers, but the lag doesn’t mean the agency is likely to block the deal, Bloomberg Intelligence analyst Matthew Schettenhelm said in an April 7 note. Filings indicate the FCC “is still discussing the conditions with the parties,” Schettenhelm said in the note.
The deal needs approval from the FCC and antitrust regulators at the Justice Department. Neil Grace, an FCC spokesman, declined to comment.
California regulators have set a tentative decision for April 12, with a final decision by the California Public Utilities Commission due May 12.
“We continue to have productive conversations with the FCC and we look forward to a timely resolution,” Alex Dudley, a Charter spokesman, said in an e-mail.
When the deals were announced, Charter agreed to acquire Time Warner Cable and Bright House Networks LLC for $55.1 billion and $10.4 billion, respectively.