Comcast Sacrificing Customers to Win Deal With TWC

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in Q1 2014.**

Comcast is proposing to sell 1.4 million of its cable television subscribers to Charter Communications for $7.3 billion in an effort to get approval for its proposed merger with Time Warner Cable.

The sale would increase Charter’s customer tally from 4.4 million to 5.7 million, making it the second-largest U.S. cable company once the Comcast-TWC merger is complete, USA Today reported.

The divestiture plan would take effect after the merger closed. Comcast and Charter would also swap about 1.6 million TWC customers and 1.6 million Charter customers in what’s being referred to as a “tax-efficient like kind” exchange. Charter would then acquire one-third of a publicly traded spin-off company with about 2.5 million current Comcast customers of which Comcast would own two-thirds.

Ultimately, the deals would put Comcast’s managed residential subscriber base below 30 percent of total cable TV subscribers nationwide, a number that could be more enticing to regulators who will decide the merger’s fate. The wheelings and dealings would leave the combined Comcast-Time Warner Cable with about 30 million customers, still making it the largest cable operator by far, just not dwarfing the competition by quite as much.

The two cable giants have argued that their merger should get the green light in part because they don’t directly compete against one another for residential customers in major markets.

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