Charter to Buy Si Newhouse's Bright House Networks for $10.4 Billion

Cable Consolidation as Comcast-Time Warner Merger Drags

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Charter Communications has agreed to buy a majority stake of billionaire Si Newhouse Jr.'s Bright House Networks, for $10.4 billion, expanding its footprint in states including California, Florida and Michigan.

Charter will pay Advance/Newhouse common and convertible preferred stock and $2 billion in cash for the 73.7 percent stake, Stamford, Connecticut-based Charter said in a statement Tuesday.

"Scale has always been important in this industry, especially as a way to get good deals on content, which is the single biggest cost driver for these companies," said Jan Dawson, an analyst with Jackdaw Research. "Given the scale benefits, it's natural that they want to combine."

Bright House, the sixth-largest U.S. cable company with about 2.5 million cable subscribers, is a consolation prize for Charter after it lost out to Comcast Corp. last year in an effort to buy Time Warner Cable. Comcast's $45.2 billion purchase of Time Warner Cable is pending regulatory approval.

In the wake of that transaction, Charter agreed last April to take control of 3.9 million Comcast cable-TV customers as a way to ease the approval process for the Comcast-Time Warner Cable deal.

Kim Hart, a Federal Communications Commission spokeswoman, declined to comment.

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Charter's purchase of Syracuse, New York-based Bright House depends on conditions, including shareholder and regulatory approval, Time Warner Cable's right of first offer for Bright House and the close of Charter's transactions with Comcast.

"If this deal goes through, it will work out well for Charter, giving it more revenue and muscle to compete," said Roger Entner, an analyst with Recon Analytics LLC in Dedham, Massachusetts.

Bright House is owned by the Newhouse family's Advance Publications, which also controls Conde Nast, the publisher of magazine brands such as Vogue and The New Yorker.

~ Bloomberg News ~

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