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Verizon may be looking in to a combination with Charter Communications. (Photo credit: MANDEL NGAN/AFP/Getty Images)
Telecom provider Verizon Communications Inc. is reportedly exploring a tie-up with cable network Charter Communications Inc. in the latest move to consolidate telecom and media, according to the Wall Street Journal.
The Wall Street Journal reports that Verizon CEO Lowell McAdam has approached Charter, though it is not certain a deal will materialize. According to Reuters, however, no proposal has been made.
That hasn't stopped the market from reacting: Charter Communication's share price is currently up 8% to $331 a share following the news.
Shareholders have reason to be pleased. A merger would unite Verizon’s 114 million-plus wireless subscribers with Charter’s cable network, which provides television to 17 million people and internet connections to 21 million. Combining the two could provide new opportunities for growth for both, as customers increasingly look to their smartphones for entertainment. (Charter last year said it planned to resell Verizon wireless service to its cable users.)
A tie-up would come at a trying time for both businesses. Verizon faces stagnation in its core cell phone service, while cord-cutting and the rise of streaming services such as Netflix threaten Charter's core business.
Any combination would be pricey: Charter Communication's current market cap is some $84 billion. It is currently the second largest cable television provider in the U.S. behind Comcast.
Combining with Charter would mimic AT&T's 2015 purchase of DirecTV for $49 billion, making Verizon a key player in the combined TV and phone business. The wireless provider has been eager to diversify, snapping up Yahoo's internet properties for $4.8 billion in 2016; that deal faces delays following Yahoo's disclosure of data breaches.
A deal would need the approval of major stakeholder John Malone, whose Liberty Broadband holds a 25% stake in the company, and the Newhouse family, which retains a 7% holding.
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