SPECTRUM is buying one of its biggest rivals in a deal that could create a cable powerhouse.
The two companies confirmed the merger plans this month with a price tag of a whopping $34.5 billion.
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While the transaction awaits regulatory approval and approval from shareholders at Spectrum, otherwise known as Charter Communications, it could soon result in a new conglomerate with the acquisition of Cox Communications.
Cox has over 6.5 million cable, internet, home security, and telephone customers across several states, with a strong presence in California and Virginia.
For Spectrum, that number is considerably higher at about 32 million customers across 41 states.
So, why the sudden merger?
Cable continues to have popularity struggles with streaming services like Amazon Prime, Apple TV+, Disney+, HBO Max, Netflix, Paramount+, and others taking viewership.
Several, like YouTube TV, even offer cable channel options.
Mobile phone companies like AT&T and T-Mobile also now offer home internet plans.
With pressures mounting in the industry, Spectrum is likely working to increase competition, according to some experts.
“Both Cox and Charter are seeing customer defections to mobile home internet and to streaming companies on the media side,” Neil Saunders, analyst and managing director at GlobalData, told The Daily Mail.
Saunders warned that the merger wouldn’t affect the deviation from cable, but it could offer Spectrum more opportunities to create more benefits for consumers.
“A merger doesn’t stop that trend, but it does give them more power when buying content and in their service offerings,” he said.
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News of the merger still sparked fears among some current Spectrum customers, who suspected that it would only result in higher prices.
“Oh yay soo let’s raise our already outrageous cable/internet bill again,” a longtime customer fumed in a thread on Facebook.
“I’m about to cancel cable and just stream.”
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“They are a monopoly! Ridiculous this is even allowed,” someone else cried out.
“They split the territory so they don’t compete with each other.”
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Despite the concerns, Saunders said he expected cost bumps wouldn’t happen, as companies like Spectrum know that they could quickly lose customers to streaming.
“Even a merged company will have to be very conscious about the alternatives consumers now have,” he added.
Per the specifics of the merger, Spectrum will obtain Cox’s commercial fiber, cloud businesses, and managed IT.
Cox would own only 23% of the company shares, but Spectrum would pay off its nearly $12.6 billion in debt.
Chris Winfrey, CEO of Charter Communications (Spectrum), emphasized the positives of the merger in a statement.
“This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service, to millions of homes and businesses,” Winfrey said.
He’s set to become president and CEO of the newly formed company should the merger receive regulatory approval.
Some competing streaming services have been getting backlash recently from Americans for price increases.
Netflix made its last uptick in January, with the monthly rate getting as high as $25.
HBO Max also rolled out an extra fee last month, just weeks after axing a fan-favorite feature.
