Charter to Buy Time Warner Cable: Winners and Losers
Charter Communications on Tuesday said it will acquire Time Warner Cable in a deal valued at more than $55 billion. Charter will also buy Bright House Networks, a smaller cable company, for $10.4 billion. The two deals combined will make Charter into the second-largest cable and broadband provider in the U.S., with about 24 million subscribers, behind only Comcast, which has about 27 million subscribers.
WINNERS
Time Warner shareholders: An extra $10 billion over the $45.2 billion Comcast had offered sure makes for a nice payday after the earlier deal got scrapped. “Time Warner Cable has succeeded in extracting a fantastic price for its shareholders, far exceeding our expectations,” Morningstar strategist Michael Hodel wrote Tuesday. Hedge fund managers John Paulson of Paulson & Co. and Chris Hohn of Children’s Investment Fund Management reportedly both had sizable holdings in Time Warner Cable.
Time Warner Cable subscribers: The company’s service is reviled by customers. Charter’s isn’t exactly beloved, either, and subscribers may not see any immediate changes, but Charter promises that the deal will translate into faster broadband for subscribers and more free public Wi-Fi. Whether it actually does or not, the deal seems to spell the end of the Time Warner Cable name. Subscribers won’t miss it.
John Malone: The Liberty Media billionaire finally gets the megadeal he’s been looking for to make Charter Communications into a major industry power. If the deals goes through, the company would become the second-largest cable and broadband provider in the country, with some 24 million total subscribers.
Related: Charter and Time Warner Cable Merger: It’s All About Broadband
LOSERS
Comcast: At least CEO Brian Rogers was graceful about the prospect of a larger competitor. "This deal makes all the sense in the world,” he said in a statement. “I would like to congratulate all the parties."
Television content providers: One rationale for the deal is that the scale of the combined company will afford it more leverage in its negotiations with programmers.
Cable customers and online video watchers? The proposed deal still concerns consumer advocates like those at public interest group Free Press. “The issue of the cable industry's power to harm online video competition, which is what ultimately sank Comcast’s consolidation plans, are very much at play in this deal,” said Derek Turner, research director for Free Press. “Ultimately, this merger is yet another example of the poor incentives Wall Street’s quarterly-result mentality creates. Charter would rather take on an enormous amount of debt to pay a premium for Time Warner Cable than build fiber infrastructure, improve service for its existing customers or bring competition into new communities.”
Increasing Number of Americans Delay Medical Care Due to Cost: Gallup
From Gallup: “A record 25% of Americans say they or a family member put off treatment for a serious medical condition in the past year because of the cost, up from 19% a year ago and the highest in Gallup's trend. Another 8% said they or a family member put off treatment for a less serious condition, bringing the total percentage of households delaying care due to costs to 33%, tying the high from 2014.”
Number of the Day: $213 Million
That’s how much the private debt collection program at the IRS collected in the 2019 fiscal year. In the black for the second year in a row, the program cleared nearly $148 million after commissions and administrative costs.
The controversial program, which empowers private firms to go after delinquent taxpayers, began in 2004 and ran for five years before the IRS ended it following a review. It was restarted in 2015 and ran at a loss for the next two years.
Senate Finance Chairman Chuck Grassley (R-IA), who played a central role in establishing the program, said Monday that the net proceeds are currently being used to hire 200 special compliance personnel at the IRS.
US Deficit Up 12% to $342 Billion for First Two Months of Fiscal 2020: CBO
The federal budget deficit for October and November was $342 billion, up $36 billion or 12% from the same period last year, the Congressional Budget Office estimated on Monday. Revenues were up 3% while outlays rose by 6%, CBO said.
Hospitals Sue to Protect Secret Prices
As expected, groups representing hospitals sued the Trump administration Wednesday to stop a new regulation would require them to make public the prices for services they negotiate with insurers. Claiming the rule “is unlawful, several times over,” the industry groups, which include the American Hospital Association, say the rule violates their First Amendment rights, among other issues.
"The burden of compliance with the rule is enormous, and way out of line with any projected benefits associated with the rule," the suit says. In response, a spokesperson for the Department of Health and Human Services said that hospitals “should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it.”
See the lawsuit here, or read more at The New York Times.
A Decline in Medicaid and CHIP Enrollment
Between December 2017 and July 2019, enrollment in Medicaid and the Children's Health Insurance Program (CHIP) fell by 1.9 million, or 2.6%. The Kaiser Family Foundation provided an analysis of that drop Monday, saying that while some of it was likely caused by enrollees finding jobs that offer private insurance, a significant portion is related to enrollees losing health insurance of any kind. “Experiences in some states suggest that some eligible people may be losing coverage due to barriers maintaining coverage associated with renewal processes and periodic eligibility checks,” Kaiser said.
