Federal Communications Commission and Department of Justice finally approved the merger between Charter Communications and Time Warner Cable on Monday. However, the merged company will have to follow a stringent obligation imposed to it by the US Justice Department and FCC.
According to Wall Street Journal, Charter agreed to abandon several common industry practices for seven years. Such practices are what the government feared to threaten the growth of rival online video providers such as Netflix Inc. and Hulu. Charter also agreed to not impose data caps or charge broadband Internet customers based on data usage.
Charter Communications had announced a plan to acquire Time Warner Cable in May last year in the $56 billion cash-and-stock deal. Merger between these two companies will make the new company as the second largest Internet and cable company in the US after Comcast. Once the deal is complete, according to CNN, Charter will stand next to Comcast, AT&T, and Verizon as a media giant shaping the future of television-watching and web-surfing.
Charter Communications CEO Tom Rudledge is pleased with the deal which was proposed by FCC chairman Tom Wheeler. The merger deal is still waiting for the rest of FCC member to vote and California Public Utilities Commission which is scheduled on May 12 to vote on the matter.
"We are pleased that Chairman Wheeler has submitted the proposed conditions for consideration by the full Commission and that the DOJ has submitted its agreement for approval by the court," Rutledge said in his statement.
Time Warner Cable CEO Rob Marcus also expressed his satisfaction with the proposed conditions from FCC and Department of Justice. He said, "We are pleased to reach this critical step in the regulatory review of our merger with Charter and remain optimistic that the transaction will be finalized soon."
The proposed condition which is to be imposed to the new company are meant to ensure competition in the online video business and to spread Internet connectivity. The condition as New York Times reported, could blunt the power of the new company which will become the second largest broadband provider and the third-largest cable television provider in the US. The new company will have a combined 19.4 million users for the boradband service, and 17.4 million customers for cable television provider with.
"The cumulative impact of these conditions will be to provide additional protection for new forms of video programming services offered over the Internet," Wheeler said.
Department of Justice and FCC is poised to approve acquision of Time Warner Cable by Charter Communications Inc. on Monday. The new company will have to follow strict obligation to ensure competition in the sector.
