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Charter to pay $10.4 billion to acquire Bright House Networks

March 31, 2015

Charter Communications Inc. has agreed to acquire fellow cable operator Bright House Networks LLC in a deal valued at $10.4 billion, confirming earlier reports.

Charter is the fourth-largest cable operator in the U.S, while Bright House is the sixth biggest, with customers in Florida, Alabama, Indiana, Michigan and California. The Bright House transaction would make the new company the second-largest U.S. cable operator.

The deal comes as cable operators are scrambling to consolidate amid growing competition from non-cable programming suppliers such as Netflix.

Bright House has more than 120,000 customers in central Indiana, especially in Hendricks, Boone, Hamilton, Marion and Grant counties.

Charter had previously struck some subscriber deals with Comcast Corp., which is hoping the moves will help it gain approval for its acquisition of Time Warner Cable. Comcast is selling 1.4 million subscribers to Charter for $7.3 billion in cash and spinning off another 2.5 million subscribers into a company that Charter will take a one-third stake in.

In connection with the deals between Charter and Comcast, Charter is expected to partake in a corporate reorganization, with a subsidiary of Charter becoming the new publicly traded parent company of Charter.

The business will be conducted through a partnership, with Charter owning 73.7 percent and Advance/Newhouse — the parent company of Bright House — owning 26.3 percent.

Charter said Tuesday that it will pay Advance/Newhouse $2 billion in cash and common and convertible preferred units in the partnership. The partnership units that Advance/Newhouse owns can be exchanged for common shares of the new company.

The transaction is subject to conditions including Charter shareholder approval, the expiration of Time Warner Cable's right of first offer for Bright House and the closing of Charter's previously announced deals with Comcast.

Once the Bright House deal closes, Liberty Broadband Corp. — which is currently Charter's biggest shareholder — will buy $700 million newly issued shares of the new company.

The board of the new company will include 13 members, with three directors appointed by Advance/Newhouse and three directors appointed by Liberty Broadband.

Shares of Charter Communications rose $13.60, or 7.4 percent, to $196.99 in morning trading. Liberty Broadband's stock gained $3.09, or 5.7 percent, to $56.79.

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