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California Judge Agreed Charter's Acquisition of Time Warner Cable With Conditions

April 13
7:04 AM 2016

California administrative law judge recommended the approval of proposed acquisition of Time Warner Cable and Bright House Networks by Charter Communications Inc on some conditions. The decision was announced late Tuesday.

Charter Comminication Inc made a $56 billion acquisition of Time Warner Cable (TWC) last year in May. Prior to acquire TWC, in March 2015, Charter also acquired Bright House Networks in a $10.4 billion deal. Those acquisitions will make Charter as the second largest Internet and cable company in the US behind Comcast.

The acquisition is now waiting for regulatory approval from several states as well as from FCC. Last week Charter CEO met the head of FCC to discuss the deal. California is the last state that has not decided, and California Public Utility Commission (CPUC) is scheduled on May 12 to vote on the matter.

On Tuesday, judge Administrative Law Judge at CPUC Karl Bemesderfer proposed the state of California to approve the merger, as the deal was in the public interest. Reuters reported that judge Bemesderfer in his 70-page proposed decision also imposed significant conditions on Charter.

Some of the conditions are requiring Charter to convert all California's households in the company's service territory to a digital platform with minimum download speed of 60Mbps. This must be achieved within two and a half years of closing the transaction. Charter must also allow its customers in California to acquire their own modems and cable set-top boxes without any price increases.

Los Angeles Times reported that judge Bemesderfer said the cable merger would bring several advantages to customers in California. That include faster Internet speeds and more wireless hot-spots. Judge Bemesderfer also acknowledged the acquisition made a less than ideal situation, because Charter will become the only provider of broadband Internet service in some areas.

"The merger of smaller monopolists into a bigger monopoly does little to worsen the situation of customers who are already faced with take-it-or-leave-it offers from their local cable service provider," said judge Bemesderfer in his recommendation.

In a statement following the judge recommendation, Charter Communication said that the company was "pleased the regulatory process is moving forward and will continue our productive engagement at the California Public Utilities Commission as we work toward obtaining final approval in the weeks ahead and bringing the benefits of New Charter to more Californians."

Bloomberg reported that if Charter acquisition is approved, in California the new company will have the coverage to nearly 6.4 million households in California. While in the Los Angeles market Charter will acquire 87% cable video subscribers as its customers.

On Tuesday, California administrative law judge recommended to approve acquisition of Time Warner Cable by Charter Communications with certain conditions. Judge Karl Bemesderfer said the acquisition was in the public interest.

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