Cable giants Charter and Cox are merging — but don't expect the cord-cutting bloodbath to reverse

The nation's biggest pay-TV provider is getting adjacent bigger — and not a infinitesimal excessively soon.

Cable elephantine Charter unveiled plans connected Friday to merge with Cox successful a $34.5 cardinal deal. The woody could connection the companies a lifeline at a clip erstwhile the pay-TV concern is connected shaky crushed and losing subscribers to cord-cutting.

A Charter-Cox operation would beryllium amended equipped to conflict Comcast successful broadband internet, cellphone service, and wage TV. Leaders astatine some companies pitched the merger arsenic a triumph for customers, employees, and adjacent America — a not-so-subtle olive subdivision to Trump.

The transaction is expected to adjacent successful the adjacent 2 years, pending support from the Trump administration. The caller entity would beryllium called Cox Communications and follow Charter's Spectrum branding for customers.

There are galore reasons Charter and Cox joining forces appears to beryllium a "no-brainer," media expert Jeffrey Wlodarczak of Pivotal Research Group said.

By teaming up, Charter-Cox tin prevention connected selling costs portion investing much successful merchandise and technology, Charter CEO Chris Winfrey said Friday connected a telephone announcing the deal. He added that the combined institution would person a broader geographic reach.

This tie-up whitethorn besides springiness Charter-Cox immoderate much-needed leverage successful carriage negotiations. Charter's 12.7 cardinal video customers, much than Comcast's 12.1 million. That makes it the starring subordinate successful the rapidly shrinking pay-TV industry. The Cox merger would bring the companies' full to 14.4 million.

Cutting down connected cord-cutting

There are advantages to being the biggest food successful a pond that's drying up.

While cord-cutting whitethorn beryllium inevitable, Charter has utilized its leverage to dilatory the diminution by convincing media companies to see their streaming services successful its bundles astatine nary other complaint to customers.

This statement is win-win. For programmers similar Disney and Warner Bros. Discovery, it keeps carriage fees coming erstwhile they whitethorn different shrink owed to cord-cutting. Before this concession, Charter had scoffed at paying the rates Disney wanted to transportation its networks.

Meanwhile, Charter's subscribers person much worth by getting streaming services for free, giving them a beardown inducement not to chopped the cord. Cox customers are acceptable to get the aforesaid woody that has helped Charter trim its cord-cutting complaint from a debased of 9.5% successful the 2nd 4th of 2024 to 7.3% successful Q1 of this year. That's according to an investigation by equity probe steadfast MoffettNathanson.

Charter has made important advancement successful trimming its video losses, acknowledgment to its caller bundles. MoffettNathanson

"Our video losses are astir apt the champion successful the MVPD industry," Winfrey said connected Friday's call, utilizing the manufacture word for pay-TV providers. "And we mean to amended that."

Comcast has contended with higher rates of cord-cutting. MoffettNathanson

The resilience of Charter's streaming-saturated cablegram bundle, which includes Disney+, Peacock, Paramount+, and the soon-to-be-renamed HBO Max, has impressed analysts.

"Don't look now, but Charter's 'linear-plus-streaming' video strategy mightiness conscionable beryllium working. Video subscriber trends are getting … hold for it … BETTER!" Craig Moffett of MoffettNathanson said successful a enactment aft Charter's first-quarter net report.

Moffett was thrilled with the projected Cox merger. He wrote successful a Friday enactment that it was "very, precise welcome" and had "almost nary downside."

"Charter's video retention rates are already by acold the champion successful the industry, and that's mostly successful advance of the benefits of the streaming-included strategy, which is lone present achieving afloat availability," Moffett wrote.

Cox's footprint could springiness Charter adjacent much negotiating powerfulness with programmers, though Winfrey said helium aims to "work together" with them.

But contempt Charter's champion efforts, including its reimagined cablegram bundle and imaginable synergies with Cox, even Winfrey knows the days of increasing the pay-TV concern whitethorn beryllium over.

"Whether that means conscionable little losses connected video, oregon much video growth, I'm not successful a presumption to spell forecast that today," Winfrey said. "But I deliberation it tin beryllium amended than what it is connected its existent trajectory."