On Tuesday, Charter Communications announced its plan to acquire Time Warner Cable for about $US56 billion. Once the deal goes through, Charter-Time Warner Cable will form the second largest cable broadband provider in the US, just after Comcast.
Tuesday’s deal is all about gaining share in the broadband market. Traditional TV subscriptions have been on a decline lately, while broadband internet continues to grow. According to BI Intelligence, based on data from Leichtman Research Group, broadband subscribers in the first quarter of 2015 increased to 53 million in the US, up 5% year-over-year. TV subscriptions, by contrast, dipped to 49.2 million, or down about 2% over the same period.
What this means is that cable TV subscribers are slowly ditching their TV packages while keeping their internet service — and getting access to streaming video sites like Netflix and Hulu. The new Charter-Time Warner entity would put them in a better position to control this market, accounting for nearly 30% of the US broadband market, according to research firm MoffettNathanson.