Just how badly does Comcast want to swallow up Time Warner? Apparently, badly enough to shake off nearly four million existing customers, the majority of whom will wind up with service from a new spin-off company.
Comcast Corporation today announced an agreement with Charter Communications intended to shore up the cable giant's ongoing merger with Time Warner Cable (TWC) by actually dropping customers from its combined ranks.
Through a series of three separate "tax-efficient" transactions, the combined Comcast-TWC conglomerate have voluntarily agreed to lob roughly 3.9 million video customers in the direction of rival Charter, with approximately 1.4 million coming from the TWC side of the business.
The deal would boost Charter's own subscriber ranks from 4.4 million to somewhere in the neighborhood of 5.7 million, positioning the company as the second largest cable provider in the US - after the combined weight of Comcast-TWC, that is.
Welcome to SpinCo
Comcast has made no secret that it's willing to shed customers in an effort to push the proposed merger through, and the deal already approved by the Boards of Directors of the three companies appears intended to aid in that cause.
Once merged, Comcast-TWC plans to sell off approximately 1.4 million existing Time Warner customers in exchange for cash, followed by a transfer of tax-free assets from another 1.6 million customers between Time Warner and Charter.
The third part of the deal involves the creation of "a new, independent, publicly-traded company" currently referred to as SpinCo., which will serve roughly 2.5 million existing Comcast customers, with a new Charter holding company overseeing 33 percent of the operation.
Although the agreement would keep Comcast's stranglehold on the cable TV industry under 30%, it remains to be seen if that will be enough to satisfy government regulators, who have yet to approve the merger.
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