Central Kentucky cable customers likely to end up with Charter under complex deal

jpatton1@herald-leader.comApril 29, 2014 

Time Warner Cable customers in Kentucky are likely to end up as customers of Charter Communications in a proposed deal announced Monday.

Under the three-part plan — which would allow another cable company, Comcast, to complete a long-stalled merger with Time Warner Cable — 1.4 million customers in Kentucky, Ohio, Wisconsin, Indiana and some parts of Alabama are to be acquired by Charter for about $7.3 billion.

Based in Stamford, Conn., Charter is a regional cable television service provider that announced plans earlier this year to become the second-largest cable company in the country by buying Time Warner Cable.

Instead, Comcast made a play for Time Warner Cable, and Charter challenged. To settle the dispute, under Comcast's planned purchase of Time Warner Cable, Charter might achieve its goal anyway.

Charter has about 4.4 million customers and under the proposed deal would expand to 5.7 million, with control of 2.5 million more.

In addition to solidifying the Midwest portion of the cable pie, Charter would get a one-third ownership stake (with managing control) in a separate spin-off cable company that would include customers in far Western Kentucky as well as Indiana, Michigan and elsewhere.

Charter has said that it needs to get bigger for the efficiencies of scale necessary to maintain systems and roll out new features and technologies in an industry in which many customers are abandoning cable TV for Internet-based services including Netflix, Hulu and Amazon Prime.

According to a review of customer complaints online, Charter is plagued by slow Internet speeds, incorrect billing and poor customer service.

Consumer groups criticized the proposed deal.

Matt Wood, policy director for the media consumer advocacy group Free Press, said the deal does nothing to address the problem that cable companies intentionally don't compete in one another's service areas. That leads to higher prices and worse customer service, Wood argued.

"It doesn't do enough to address the harms of having even fewer companies," he said.

Charter's chief executive, Thomas M. Rutledge, said in a statement Monday that "the transactions announced today will provide Charter with greater scale, growth opportunities and improved geographical rationalization of our cable systems, which, in turn, will drive value for shareholders and more effective customer service."

The companies said they expect to file more details on the proposed transaction within 30 days. The deal must receive regulatory approval.

The Associated Press contributed to this report. Janet Patton: (859) 231-3264. Twitter: @janetpattonhl.

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