TWC Time Warner Cable

   (FROM THE WALL STREET JOURNAL 3/16/16) 
   By Shalini Ramachandran and John D. McKinnon 

Federal Communications Commission Chairman Tom Wheeler is likely to circulate a draft order as soon as this week approving Charter Communications Inc.'s $55 billion deal to buy Time Warner Cable Inc. with certain conditions, according to people familiar with the matter.

The order would impose a number of conditions on the transaction, many of them aimed at boosting online video as a competitor to cable. One condition would bar Charter from including clauses in its pay-TV contracts that restrict a content company's ability to offer its programming online or to new entrants, the people said. FCC officials worry those clauses, which are thought to be widespread in the pay-TV marketplace, could be impeding the growth of online video.

The order will be sent to the four other FCC commissioners for review and could be modified in the coming days. But the emerging outlines of a deal represent a win for Charter and its management, after Comcast Corp.'s bid to buy Time Warner Cable collapsed last year when regulators were prepared to block the acquisition over concerns about its competitive impacts.

As currently envisioned, the Charter-Time Warner Cable order would include several other features that could help speed development of online video, a big priority for Mr. Wheeler.

The deal is likely to include a requirement for Charter to build or upgrade service to more homes, boosting availability of high-speed broadband. In some cases the buildout could give consumers an alternative to Internet service offered by big phone companies like Verizon Communications Inc. and AT&T Inc. Mr. Wheeler has indicated before that it would help competition if cable companies venture outside their exclusive regions and "overbuild" into each other's service areas to compete against each other.

The specifics of the buildout requirement are still being negotiated, the people close to the talks said, though some expressed doubt that the FCC will impose cable-on-cable competition.

The deal with the FCC would cement previous commitments by Charter early on, including to refrain from imposing data caps or Internet usage-based billing and to waive fees for interconnecting with the networks of content companies such as Netflix Inc. and long-haul telecom providers. Charter also had committed to abide by the FCC's stringent net neutrality rules even if they get tossed out by the courts, where they are being challenged.

Charter pledged to abide by those conditions for three years. It is possible that the FCC could extend the time frame as part of the deal, people close to the talks said.

After the chairman's office circulates the draft order to the other commissioners, they will have the opportunity to ask for additional concessions from the companies before the final order is written. The process before final approval could take a few weeks, one of the people said.

Just as with AT&T's deal to buy DirecTV, the FCC will likely require Charter to retain an independent monitor approved by the agency who will evaluate whether Charter is complying with the conditions, some of the people said.

Even if it wins federal regulatory approval, the company still needs to persuade California's state regulator to approve its deal. Charter has said it expects a decision from California in May.

An approval would be a long-coveted win for Charter Chief Executive Tom Rutledge and cable pioneer John Malone, who faced major setbacks in their multiyear effort to buy Time Warner Cable.

(END) Dow Jones Newswires

March 16, 2016 02:48 ET (06:48 GMT)

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