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Charter Communications buying Bright House Networks in $10.4B deal

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Published Apr. 1, 2015

A Connecticut company announced Tuesday that it will buy Bright House Networks, marking the second time this year that a major cable provider in Tampa Bay will be overtaken by a company with an unimpressive customer satisfaction record.

Charter Communications Inc. said it plans to buy Bright House Networks LLC for $10.4 billion, forming the nation's second largest cable operator. Charter is the fourth-largest cable operator in the United States, while Bright House is the sixth biggest.

On customer satisfaction surveys by J.D. Power and Consumer Reports, Charter Communications ranks average or worse. Bright House generally ranks "better than most" or "among the best."

But Charter's voice, TV and Internet services currently start at $89.97 per month; Bright House's triple play offering starts at $109.

Earlier this year, Verizon also announced it was selling its FiOS TV, Internet and landline phone businesses in the Tampa Bay market to Frontier Communications for $10.5 billion. Frontier's customer satisfaction ratings also aren't very good.

The Charter-Bright House deal puts the bulk of the Tampa Bay TV and Internet market in the hands of two players new to the metro area.

The mergers come as the cable industry struggles with customers defecting to cheaper online ways to watch TV, such as Netflix, Amazon Prime and Hulu. Smaller companies see tougher cable TV times ahead and larger companies are looking for greater size to seek economies of scale. Charter, for instance, tried last year to buy Time Warner Cable but was outbid by the larger Comcast, which offered $45.2 billion. Charter then turned to Bright House.

Consumer advocates say the bigger companies probably will mean worse service for Tampa Bay cable customers.

James McQueen, a spokesman for Consumer Reports, said his company opposed the Comcast-Time Warner Cable deal because of fears customer service would suffer under the conglomerate. He said the same concern exists with Charter and Bright House.

"Typically we would advocate against those kinds of deals because we don't think it would be a good deal for consumers," McQueen said.

Mark Cooper, who analyzes cable and Internet matters for the Consumer Federation of America, said with Charter's already low customer satisfaction ratings, "there's no prospect for improvement" with an even larger company.

The mega cable company's "job is to extract the most they can from consumers, delivering the least they have to," Cooper said. "Consumers need to create the public furor" when they are dissatisfied, he said.

For its part, Bright House, and its parent company Advance/Newhouse Partnership, said the deal will improve service.

Justin Venech, a spokesman for Charter, said his company recognized the need for improvement in customer satisfaction and has made changes. Those improvements, he said, include hiring a new management team and 7,000 other workers; and offering an all-digital package with higher-speed Internet and more high-definition TV.

When the acquisition draws closer to completion, Venech said the impact on the new company's offerings will become clearer. He said the companies aim to close the deal by the end of the year or early 2016.

With the announcement of the deal, Charter's stock rose $9.72 Tuesday to $193.11 per share.

The new business will be conducted through a partnership, with Charter owning 73.7 percent and Advance/Newhouse owning 26.3 percent.

Bright House — Florida's second-largest cable provider — also runs the Bay News 9 local news channel and has its name on the Philadelphia Phillies spring training complex in Clearwater. It has about 2.4 million residential customers while Charter has 5.8 million.

Bright House's biggest market is in Florida, where it has a strong presence in both the Tampa Bay and Orlando metro areas. Bright House also serves customers in Alabama, Indiana, Michigan and California.

Other major holdings of the Newhouse family, run by billionaire Si Newhouse Jr., include Conde Nast, the publisher of such major magazines as Vogue, Vanity Fair, Wired and the New Yorker.

The other newcomer, Frontier, has grown by expanding its cable holdings in rural parts of the country, making Tampa Bay a strategic leap to enter larger markets. Its purchase from Verizon was pegged at $10.5 billion.

Cooper said consumers are being handed one larger monopoly after another with no recourse from regulators. He said if the federal government isn't stopping the Time Warner/Comcast deal, it won't stop the Charter/Bright House acquisition.

"That's the sad truth of where we are in America," Cooper said. "They do not face competition."

Both Frontier and Charter happen to be headquartered in the same city: Stamford, Conn.

Charter's market value is $21.7 billion. Frontier's value is just over $7 billion.

Times staff writers Robert Trigaux and Rachel Crosby contributed to this report. Contact Ivan Penn at ipenn@tampabay.com or (727) 892-2332. Follow @Consumers_Edge.