×
You will be redirected back to your article in seconds

Comcast and Charter Join Forces on Wireless, Tamping Down Speculation of Cable Mobile M&A Plays

Comcast and Charter Communications, the two biggest U.S. cable operators, are teaming up to cut the cord.

The cable giants announced a pact Monday under which they will collaborate to develop technical infrastructure for wireless operations — with the goal of spending less together on their forays into mobile services than they would spend separately.

The partnership raised the specter of Comcast and Charter potentially teaming up to jointly acquire either Sprint or T-Mobile (as the deal precludes the cable operators from individually entering into such talks for one year). It also would put the kibosh on a deal by Verizon to buy Charter, after the telco was rumored to have made preliminary overtures about a takeover, without Comcast’s consent.

Wall Street analysts said the Comcast-Charter pact shows the companies have no intention of combining their cable operations with wireless infrastructure players. “Far from being an opening salvo for M&A, as many read the announcement, it should instead have been read as an admission that large-scale M&A is increasingly out of reach,” MoffettNathanson’s Craig Moffett wrote in a research note.

Deutsche Bank analyst Bryan Kraft also said it’s unlikely that the two cable operators will pull the trigger on acquiring wireless assets. “This agreement, while it doesn’t preclude M&A, seems to further support that the focus will be on the MVNO [mobile virtual network operator] approach for the foreseeable future,” Kraft wrote in a research note.

Comcast plans to launch Xfinity Mobile, a service powered by Verizon Wireless, in the next few weeks. It’s intended to reinforce Comcast’s wireline bundle: Xfinity Mobile will be available together with Comcast’s other Xfinity services, with up to five phone lines automatically available for no extra cost when a customer adds Xfinity Mobile to their Xfinity Internet service.

Both Comcast and Charter already have separate deals with Verizon Wireless, which is providing the national wireless network to power their mobile products. Under the cable companies’ pact, they have agreed to work together only with respect to national mobile network operators, through potential commercial arrangements including deals with third-party carriers (like Verizon) and “other material transactions” in the wireless industry, for a 12-month period.

The companies said their agreement covers several potential operational areas in wireless including: creating common operating platforms; technical standards development; device forward and reverse logistics; and emerging wireless technology platforms.

In a bid to lobby government regulators on the benefits of the tie-up, Comcast and Charter said the deal is expected to provide “more choice, innovative products and competitive prices” for consumers. The operators will be competing for share in the wireless space against AT&T, Sprint and T-Mobile, as well as their mutual partner Verizon.

“Both of our companies have regional wireless businesses using the same 4G LTE network [operated by Verizon], and by working together our goal is to create even better experiences for our customers,” Comcast chairman and CEO Brian Roberts said in a statement.

Tom Rutledge, Charter’s chairman and CEO, added, “By working with the team at Comcast, we can not only speed Charter’s entry into the marketplace, it will also enable us to provide more competition and drive costs down for consumers at a similar national scale as current wireless operators.”

Under the terms of the Comcast-Charter wireless agreement, the operators have agreed that they will not discuss transactions worth more than $50 million with any national mobile wireless carrier that would represent an acquisition (directly or indirectly) of at least 50% of the voting power or consolidated assets of the carrier, according to a Comcast filing with the SEC.

In addition, Comcast and Charter have agreed that they won’t separately engage in any material wireless transactions (investments, M&A or joint ventures) with a value of more than $200 million in which the direct or indirect purchase by Comcast or Charter of wireless spectrum constitutes at least a majority of the transaction value.

More Biz

  • CAA HQ LA

    Ex-Agent Stuart Manashil Ordered to Repay CAA in Fraud Case

    Former literary agent Stuart Manashil was ordered on Thursday to repay a $23,975 commission to CAA, which he admitted he had illegally diverted to a friend. Manashil, who now runs his own management company, pleaded guilty in March 2018 to a federal wire fraud charge. In a letter to U.S. District Judge Kimba Wood, Manashil [...]

  • "The Continent," directed by Chinese racer

    Alibaba Pictures Buys Into Chinese Director Han Han's Film Studio

    Alibaba Pictures confirmed that it has invested an undisclosed amount in Chinese celebrity blogger-turned-film director Han Han’s Shanghai Tingdong Film. Han’s upcoming “Pegasus” is one of the most anticipated films of the year in China. Alibaba Pictures, part of e-commerce giant Alibaba, is now the second-largest stakeholder in Tingdong. It has a 13.1% stake, according to Chinese [...]

  • Phil McIntyre Steps Down as Roc

    Phil McIntyre Steps Down From Roc Nation Management, but Remains Affiliated With Company

    Phil McIntyre has stepped down as president of Roc Nation Management, but his PhilyMack management company remains affiliated with Roc, a source close to the situation tells Variety. PhilyMack, which McIntyre founded in 2006, partnered with Roc Nation in 2015. The source stressed that McIntyre’s role at Roc Nation Management  — whose clients include Rihanna, [...]

  • Harvey Weinstein Trial

    Ben Brafman Drops Out of Harvey Weinstein Rape Case

    Harvey Weinstein has officially parted ways with defense attorney Ben Brafman, releasing a joint statement Thursday announcing the move. Weinstein had clashed with his defense attorney over strategy in his rape and sexual assault case. The pair issued a statement saying their parting was amicable, and that Brafman would cooperate fully with Weinstein’s new attorneys. [...]

  • Netflix - Apple TV

    Netflix Turns in Record Q4 Subscriber Gain, Price Increase Weighs on U.S. Forecast

    Netflix is beating Wall Street expectations for international subscriber growth — but its recently announced price increase in the U.S. may have put a damper on its momentum in the States. For the fourth quarter of 2018, Netflix reported 1.53 million paid net adds in the U.S. and 7.31 million internationally, to end the year [...]

  • Heather Parry Live Nation

    Live Nation Investigation of Heather Parry Also Targets Leakers (EXCLUSIVE)

    Over the past two weeks, the law firm of Paul Hastings LLP has been probing allegations reported by Variety last month that Heather Parry, the head of Live Nation Productions, had verbally abused employees and used offensive language in the workplace. But the lead investigator, Elena Baca, seems to be just as interested in uncovering [...]

  • Leslie Moonves

    Leslie Moonves to Pursue Arbitration for His $120 Million Severance From CBS

    Former CBS Corp. chairman-CEO Leslie Moonves will pursue an arbitration claim to fight CBS for the $120 million severance that he was denied last month when the company’s board of directors determined he was fired for cause. Moonves was ousted in September after multiple women came forward with allegations of sexual misconduct against the longtime [...]

More From Our Brands

Access exclusive content