Boston, MA 04/23/2014 (wallstreetpr) – Comcast Corporation (NASDAQ:CMCSA) indicated that it is close to entering into a subscriber pact with Charter Communications Inc. (NASDAQ:CHTR). The news emerged on Tuesday after Comcast posted a growth of 30% in its profits during the first quarter, accredited to the Winter Olympics.
Close To Deal
The company and Charter are on late stage negotiations over a complex agreement that would be applicable after its completion of $45 billion acquisition of Time Warner Cable Inc. (NYSE:TWC). As Formulated under the plan, Comcast would divest three million subscribers out of its total 33 million subscribers, following the TWC takeover, in order to keep its pay-TV market share limited to 30%. In the first phase of the deal, Charter would takeover in between 1-1.5 million subscribers, in a straight out sale. Along with this, Comcast intends to spin off a separate holding company to divest from a few million subscribers, where Charter would initially acquire stake and then could finally buy the company. If the deal goes through then Charter would be able to double its subscriber base to eight million, positioning it to the second rank among cable operators.
Netflix Worried
The Wall Street Journal reports that sources said the deal is under final stages of the discussion and runs the risk of falling apart. However, the sources believe that such an agreement could help Comcast Corporation (NASDAQ:CMCSA) to present a concrete plan of its divestment commitments and thus, allow it to persuade regulators to clear its TWC takeover. Comcast said that the agreement would not impact competitive space to consumers in any way as its operations do not overlap those of TWC’s. The deal would essentially place Comcast and Charter among the key market holders and the fact has irked Netflix, Inc. (NASDAQ:NFLX), which has opposed the deal in view of concerns about the combined position of the two companies in the broadband market share.
