Charter
Charter and Cox Communications in $34.5B merger
Two of the biggest cable network providers – Charter Communications and Cox Communications – today announced that they have entered into a definitive agreement to combine their businesses in a transformative transaction. The new entity will compete with Comcast for industry leadership in mobile and broadband communications services, seamless video entertainment, and high-quality customer service. The proposed transaction values Cox Communications at an enterprise value of approximately $34.5 billion1 based on, and at parity with, Charter’s recent enterprise value to 2025 estimated Adjusted EBITDA trading multiple. Within a year after the Charter-Cox deal closes, the combined company, which will be headquartered in Stamford, Conn., plans to change its name to Cox Communications. Spectrum will be the consumer-facing brand name.
Note 1. Comprised of $21.9 billion of equity and $12.6 billion of net debt and other obligations.
Cable internet service, once a reliable engine of high-octane growth that added millions of subscribers a year, is now a grind for the industry’s two heavyweights, Charter and Comcast. Selling a broadband connection remains their main way to reap profits from the internet economy, from streaming to gaming, but that’s not happening now as net broadband losses prevail.
Cable’s pay-TV business is all but dead as video streaming continues to eat away at cable providers’ video packages. So much so that Comcast’s Xfinity brand offers streaming TV packages such as Xfinity StreamSaver, NOW StreamSaver, and Xfinity Stream.
Meanwhile, mobile carriers like Verizon and T-Mobile have heightened the threat with home broadband service beamed over the air. Wireless companies have racked up millions of customers with the offerings, which use 5G technology to provide internet speeds that are competitive with fixed cable lines at lower prices. The pressures of this new landscape have come into focus in recent months: Charter lost 60,000 internet customers in the March quarter, while rival Comcast reported an acceleration in broadband customer losses.
“We have AT&T, Verizon, T-Mobile in 100% of our footprint. We have satellite everywhere we operate,” Charter chief Chris Winfrey said. “It’s significant.”
The deal with Cox gives the combined company more heft in competing for customers, negotiating with programmers and making network investments. It also expands the merged company’s enterprise offerings. Charter has 31.4 million customers while Cox has 6.3 million customers. The companies expect $500 million in annual cost savings within three years of the deal closing.
Source: Charter-Cox merger presentation, May 16, 2025
“Charter’s board and I are excited about this transaction and very supportive of Alex stepping into the board Chairman role,” said Eric Zinterhofer, Chairman of Charter’s Board of Directors. “The combination of Cox Communications with Charter is an excellent outcome for our collective shareholders, customers, employees and the industry.”
Photo: Jeff Roberson/Associated Press
“We’re honored that the Cox family has entrusted us with its impressive legacy and are excited by the opportunity to benefit from the terrific operating history and community leadership of Cox,” said Chris Winfrey, President and CEO of Charter. “Cox and Charter have been innovators in connectivity and entertainment services – with decades of work and hundreds of billions of dollars invested to build, upgrade, and expand our complementary regional networks to provide high-quality internet, video, voice and mobile services. This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service, to millions of homes and businesses. We will continue to deliver high-value products that save American families money, and we’ll onshore jobs from overseas to create new, good-paying careers for U.S. employees that come with great benefits, career training and advancement, and retirement and ownership opportunities.”
Cox is a major player in the internet and pay-TV business, but is still dwarfed by Charter and Comcast. The Atlanta-based family business has opted to stay private for the past two decades as other cable and wireless companies swelled through ever-bigger acquisitions. Cox is the longest continuous cable network operator in the industry, having acquired its first cable television franchise in 1962. “Our family has always believed that investing for the long-term and staying committed to the best interests of our customers, employees and communities is the best recipe for success,” said Alex Taylor, Chairman and CEO of Cox Enterprises. “In Charter, we’ve found the right partner at the right time and in the right position to take this commitment to a higher level than ever before, delivering an incredible outcome for our customers, employees, suppliers and the local communities we serve.”
Cox will eventually launch a range of products under the Spectrum brand, including Spectrum’s Advanced WiFi, Spectrum Mobile, the Spectrum TV app and Xumo, a streaming platform operated by a joint venture of Charter and Comcast.
Cox launched the Xumo Stream Box last fall. Cox also operates Cox Mobile, a mobile service based on an MVNO agreement with Verizon. Charter’s Spectrum Mobile service is also based on a Verizon MVNO. New Street’s Chaplin presumes that Cox’s mobile business will move over the Charter MVNO on Verizon and get better overall terms.
It’s not immediately clear how Cox’s network upgrade plans will change following the combination. Cox recently announced it would deploy a virtual cable modem termination system (vCMTS) from Vecima. Charter has tapped Harmonic as its initial vCMTS partner for a multi-tiered hybrid fiber/coax (HFC) upgrade.
“You really do need scale in this business,” said Andrew Cole, executive chairman of Glow Services, a telecom-focused software company, and board member of European cable company Liberty Global. Liberty Global, like Charter, is part of cable mogul John Malone’s communications empire. “The coming-together of cable in its entirety over time will happen because that’s the only way they can compete against these giants, which are the telcos,” Cole added.
Details of the Merger:
Charter will acquire Cox Communications’ commercial fiber and managed IT and cloud businesses, and Cox Enterprises will contribute Cox Communications’ residential cable business to Charter Holdings, an existing subsidiary partnership of Charter. Cox’s assets have been valued using Cox’s 2025 estimated Adjusted EBITDA, multiplied by Charter’s total enterprise value to 2025 estimated Adjusted EBITDA trading multiple of 6.44x, based on:
- Wall Street consensus for Charter’s 2025 Adjusted EBITDA, and
- Charter’s (NASDAQ: CHTR) 60-day Volume Weighted Average Price of $353.64, as of 4/25/25.
As consideration in the transaction, Cox Enterprises will receive:
- $4 billion in cash,
- $6 billion notional amount of convertible preferred units in Charter’s existing partnership, which pay a 6.875% coupon, and which are convertible into Charter partnership units, which are then exchangeable for Charter common shares, and
- Approximately 33.6 million common units in Charter’s existing partnership, with an implied value of $11.9 billion1, and which are exchangeable for Charter common shares.
Based on Charter’s share count as of March 31, 2025, at the closing, Cox Enterprises will own approximately 23% of the combined entity’s fully diluted shares outstanding, on an as-converted, as-exchanged basis, and pro forma for the closing of the Liberty Broadband merger. The transaction is subject to customary closing conditions, including the receipt of regulatory and Charter shareholder approvals. The combined entity will assume Cox’s approximately $12 billion in outstanding debt.
Within a year after the closing, the combined company will change its name to Cox Communications. Spectrum will become the consumer-facing brand within the communities Cox serves. The combined company will remain headquartered in Stamford, CT, and will maintain a significant presence on Cox’s Atlanta, GA campus following the closing.
Governance
Following the closing, Mr. Winfrey will continue in his current role as President & CEO, and board member. Mr. Taylor will join the board as Chairman, and Mr. Zinterhofer will become the lead independent director on Charter’s board. Cox will have the right to nominate an additional two board members to Charter’s 13-member board. Advance/Newhouse, another storied cable innovator, which contributed its operations to Charter’s partnership in 2016, will retain its two board nominees.
It is expected that Charter’s combination with Cox will be completed contemporaneously with the previously announced Liberty Broadband merger. As a result, Liberty Broadband will cease to be a direct shareholder in Charter and will no longer designate directors for election to the Charter Board. Accordingly, the three current Liberty Broadband nominees on Charter’s board will resign at closing. Liberty Broadband shareholders will receive direct interests in Charter as a result of the Liberty Broadband merger.
Upon closing, Charter, Cox Enterprises and Advance/Newhouse will enter into an amended and restated stockholders agreement, which will provide for preemptive rights over certain issuances, voting caps and required participation in Charter common share repurchases at specified acquisition caps, and transfer restrictions among other shareholder governance matters.
Community Leadership
The Cox family of businesses was founded 127 years ago on the promise of “building a better future for the next generation.” Both Cox and Charter want to see that intent reinforced in this new partnership. The Cox family’s commitment to supporting its communities through the philanthropic work of the James M. Cox Foundation will be continued by Charter’s $50 million grant to establish a separate foundation that will encourage community leadership and support where the combined company does business. Additionally, Charter will make an initial $5 million investment to establish an employee relief fund that mirrors the Cox Employee Relief Fund, which Cox and the Cox family created in 2005 to help employees through times of hardships such as natural disasters or other unexpected life challenges.
Strategic and Customer Objectives
Following the closing, the combined company’s industry-leading products will launch across Cox’s approximately 12 million passings and 6 million existing customers, under the Spectrum brand – including Spectrum’s Advanced WiFi, Spectrum Mobile with Mobile Speed Boost, the Spectrum TV App, Seamless Entertainment and Xumo – and which, when coupled with Spectrum’s transparent and customer-focused pricing and packaging structure, will provide Cox customers with enhanced flexibility and convenience, as well as the choice to pay less for new Spectrum bundled services or to keep their current plans.
The new combination will create a best-in-class customer service model. That model will integrate Cox’s rich service history with Charter’s 100% U.S.-based, employee-focused service and sales model and industry-leading customer commitments. Charter customers will benefit from Cox Business’ well-known industry leadership in business telecommunications, including Segra and RapidScale.
Charter and Cox employees will benefit from investments in employee-focused technology and AI tools and an expansion of Charter’s self-progression career advancement model for promotions and standardized pay increases.
Specific benefits from the combination include:
- The combined company will bring together the best products and practices of each company to benefit all of the combined company’s customers and employees.
- The combined company will be better positioned to aggressively compete in an expanding and dynamic marketplace that includes:
- Larger, national broadband companies with wireline and wireless capabilities,
- Regional wireline and mobile competitors,
- Global video distribution providers and platforms, and satellite broadband companies.
- The combined company also will be better positioned for continued and expanded investment and innovation:
- In mobile, given the increased footprint;
- In video, where Big Tech currently leverages global scale in content and distribution;
- In advertising, where the transaction will expand opportunities for advertisers large and small, national, regional, and local, bringing new competition in an area now dominated by Big Tech;
- In the business sector, where the combined company will have additional coverage, yet still remain a regional player competing against larger, national competitors;
- And through greater product innovation in areas including AI tools and small cell deployment of licensed, shared licensed and unlicensed spectrum, bringing new and advanced services and capabilities to consumers and businesses.
- Cox customers will gain access to Charter’s simple and transparent pricing and packaging structure, including no annual contracts for any residential services, which means customers are free to change service providers at any time, with no risk of early termination fees.
- Cox customers also will benefit from Charter’s industry-first Customer Service Commitments, which include:
- Charter’s 100% U.S.-based customer service team available 24/7.
- Charter has committed to fixing service disruptions quickly, including same-day technician dispatch when requested before 5:00 pm; if not, the next day.
- Charter provides customers credits for outages that last longer than two hours.
- This proposed transaction puts America first by returning jobs from overseas and creating new, good-paying customer service and sales careers.
- The combined company will adopt Charter’s sales and service workforce model, which will fully return Cox’s customer service function to the U.S.
- All employees will earn a starting wage of at least $20 per hour and will gain access to Charter’s industry-leading benefits, which include:
- Comprehensive medical, dental, and vision coverage for all full-time and part-time employees; Charter has absorbed the full premium cost increase for the last 12 years.
- Market-leading retirement benefits, including a 401(k) plan with a company match up to 6% of their eligible pay, with an additional 3% contribution available for most employees.
- Free or discounted Spectrum Mobile, TV and Internet service.
- Multiple opportunities for upward advancement and to build careers, including through tuition-free undergraduate degree and certificate programs via flexible online learning; self-progression programs with standardized pay raises, and formal development programs, such as the Broadband Field Technician Apprenticeship program.
- Employee Stock Purchase Plan, which provides frontline employees the ability to purchase stock and receive a matching grant of Charter Restricted Stock Units (RSUs) up to 1 for 1 based on years of service, offering employees another meaningful incentive to grow their careers with Charter.
- The combined company will expand Charter’s award-winning local Spectrum News stations in the Cox footprint, bringing hyper-local, unbiased news coverage to more communities. The combined company will not own any national programming.
- The combined company will retain its industry leadership in protecting the security of U.S. communications networks from foreign threats.
Adding to the near-term uncertainty for internet providers like Charter, the Trump administration put Biden’s $42.5 billion broadband-construction program on hold. The Broadband Equity, Access, and Deployment (BEAD) Program, is a key component of the “Internet for All” initiative, aiming to expand high-speed internet access across the United States. The program, funded by the Bipartisan Infrastructure Law, allocates grants to states and territories to deploy or upgrade broadband networks, ensuring reliable, affordable, high-speed internet service for all.The Commerce Department has frozen grants to state authorities that were set to start awarding contracts this year while it reviews the program’s criteria.
References:
https://www.lightreading.com/cable-technology/cablepalooza-charter-and-cox-strike-34-5b-merger
