New York revokes approval for Charter’s Time Warner acquisition, two years on

The New York State Public Service Commission decided to revoke its approval for Charter Communications’ $55 billion acquisition of Time Warner Cable in 2016, claiming the former’s failure to live up to its promises.

When it came in to snatch Time Warner Cable from Comcast’s failed acquisition bid, Charter Communications was creating the country’s second largest ISP. Although for deals like this, there are always strings attached. In Charter’s case, it won the approval from FCC stakeholders after promising, among other things, to extend high-speed broadband connections to the hitherto under-served areas in the states the new company would operate in.

In its announcement on July 27, the Commission claimed Charter has failed to add an additional 145,000 households and businesses in New York State’s rural areas to the internet network. Specifically, the Commission listed five areas where Charter has not fulfilled its promises:

  • The company’s repeated failures to meet deadlines;
  • Charter’s attempts to skirt obligations to serve rural communities;
  • Unsafe practices in the field;
  • Its failure to fully commit to its obligations under the 2016 merger agreement; and
  • The company’s purposeful obfuscation of its performance and compliance obligations to the Commission and its customers

As a result, the Commission is asking Charter to sell its Time Warner Cable assets, and to find a successor to carry out its obligations within 60 days. Charter said it would appeal.

If merging two businesses is complex and expensive, it is no less so to break a combined business that has been in operation for two years. The “Time Warner” brand is currently also involved in another, more expensive merger case with AT&T, which is also facing the danger of being forced to de-merge.

Softbank falls into the arms of another after DT issues

After reports of a breakdown in talks between Softbank and Deutsche Telekom over the Sprint/T-Mobile US merger, it didn’t take long for the Japanese telco to find someone else to party with.

When we first heard about the breakup rumours we speculated one would be out partying and one would be crying into ice cream in typical Bridget Jones style. According to the New York Post, DT is binging on Ben and Jerry’s while Softbank in flirting with Charter.

Sources have said the Japanese telco is ‘definitely’ in talks with Charter Communications for a new tie up. This would appear to be a rekindling with an old flame, as the rumour mill has already circulated such rumours in recent months. That said, it wouldn’t surprise many people as something certainly needs to change at Sprint.

Having surrendered its number three position in the US telco space to T-Mobile US, Sprint has continued its downward spiral. It is a telco which has never really been in a position to challenge Verizon and AT&T at the top of the table, and in recent months it really look capable of tackling John Legere and his T-Mobile cronies either. As mentioned before, something needs to change and a tie-up with Charter would certainly shake things up a bit.

The rumours certainly shine a light on Charter’s promiscuous side, though to date there has been little more than whispers about any consolidation. Sources have previously claimed Charter was given the option to acquire Sprint, a claim which is denied by Softbank CEO Masayoshi Son, and on the flipside, Verizon bid $350 to $400 a share for Charter.

While these are nothing more than rumours at the moment, the murmurs might help get the DT talks back on track. DT is certainly in the position of power in the negotiations with Softbank, Sprint needs change more than T-Mobile US does, however this might give the Germans a bit of a reality check.

Perhaps the fear of missing out on such a deal will soften the demands of DT who are after a controlling share in any merged Sprint/T-Mobile entity. Softbank found issue with these demands, which is apparently the reason for the breakdown.

Now we are not suggesting the rumours originated in any particular office, and we certainly wouldn’t suggest they come from offices in Tokyo, but such whispers might have a way of working out for Softbank in the strategic acquisition game.