Analysts debate good, bad of Charter, Time Warner merger

A proposed merger of Charter Communications and Time Warner Cable would create a telecommunications company virtually equal in size to industry giant Comcast. It would also have an impact on the State of Wisconsin where the merger would create a near monopoly.

“About 95 percent of the state will be in the combined territory of Charter and Time Warner,” said Barry Orton, a professor at the University of Wisconsin-Madison and telecommunications industry analyst.

In a statement released by Charter Communications CEO, Tom Rutledge says:

“With our larger reach, we will be able to accelerate the deployment of faster internet speeds, state-of-the-art video experiences and fully featured voice products at highly competitive prices. In addition, we will drive greater competition through further deployment of new competitive facilities-based WiFi networks in public places and the expansion of the facilities footprint of optical networks to serve the large, small and medium sized business services marketplace. New Charter will capitalize on technology to create and maintain a more effective and efficient service model. Put simply the scale of New Charter, along with the combined talents we can bring to bear, position us to deliver a communications future that will unleash the full power of the two-way, interactive cable network.”

The merger of the two companies will need to be approved by both the FCC and the justice department. This comes on the heels of the federal government’s rejection of a proposed merger between Time Warner Cable and Comcast. There are indications the Charter Communications and Time Warner Cable merger could be viewed more favorably.

“The regulators have shown their hand. Supposedly FCC Chairman Tom Wheeler placed an outbound call to the CEO of Time Warner Cable and Charter Communications and let them know that even though the Comcast, Time Warner Cable deal did not go through it did not mean that the commission was against all deals,” said Mellody Hobson, CBS News financial contributor.

Orton questioned the impact the merger would have on jobs in Wisconsin. He says Charter Communications and Time Warner Cable have four customer service call centers in Wisconsin and the merger could result in a reduction.

“The same thing goes with the installers,” Orton said. “I suspect there’s going to be consolidation there. This is what is called the economies of scale and so when two companies like this combine for the benefit of economies of scale it means less people have jobs and it means the customer service, if it is possible, gets worse.”