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Zombie Merger: Charter Communications Still Pursuing Bright House Networks Merger Originally Left for Dead

Phillip Dampier May 21, 2015 Bright House, Charter, Competition, Consumer News No Comments

zombie boardBright House Networks customers in central Florida are not excited by the news Charter Communications is still pursuing Bright House Networks, and both companies recently agreed to extend the deadline by 30 days for a final deal to be placed on the table.

Charter had bid $10.4 billion to acquire Bright House, which serves customers mostly in the south, including the cities of Tampa and Orlando.

“We look forward to completing the transaction as planned, and our teams are working together to make that happen,” Charter chief executive Tom Rutledge said. Reuters had recently reported Bright House was preparing to “abandon” the Charter deal, believing it was better off with sn existing cooperation agreement with Time Warner Cable.

One reason the merger talks are moving forward could be a sense Bright House’s owners have received that Time Warner Cable is still ready to sell itself to a new buyer after its merger with Comcast collapsed. One of those potential buyers remains Charter itself.

“It’s not great news for Orlando if Charter buys Bright House Networks,” says Mike Donahue, a Bright House customer for over a decade. “I had Charter when I lived in Missouri and they were terrible. I realize Charter is somewhat different today, but consumer ratings still land Charter near the bottom while Bright House has been closer to the top.”

Charter’s ongoing interest in acquiring Bright House may be to use it as a leveraging tool in its pursuit of Time Warner Cable.

Acquiring Bright House would give Charter a stronger balance sheet, allowing it to borrow more money to make a cash-rich offer for Time Warner Cable, analysts said.

Simple Website Flaw Discovered by 18-Year Old Exposed Personal Data of Millions of Charter Customers

Phillip Dampier May 20, 2015 Charter, Consumer News No Comments

cyber hackA security flaw exposed the personal data of millions of Charter Communications customers nationwide, including payment details, account holders’ names and addresses, and specifics about the equipment used to receive Charter service.

Eric Taylor, 18, discovered the simple website flaw which could be exploited to expose private account information with the use of a simple header modification using a browser plug-in.

The flaw was similar to one discovered recently in Verizon’s online customer service portal. But Taylor claims Charter’s vulnerabilities exposed “way way way more” private customer information.

Fast Company, which first published the story about the security breach, notified Charter in advance of publishing the story, allowing the company to close the breach within hours before it became widely known.

Charter immediately downplayed the security risks involved.

charter-communications“The vast majority of Charter customers use a version of the site on which this security vulnerability was not an issue,” a company spokesperson explained, noting the number of customers affected was less than one million. The company is auditing its systems, he said, and has so far “seen no evidence of any password or data hacks.” The exposed data did not include credit card numbers.

Taylor and other security researchers believe the flaw was more serious than Charter was willing to admit.

“In theory, anyone with minor programming skills could code an automated program that scans every Charter IP and returns the customers billing info,” Taylor explained. Because ISPs like Charter distribute Internet services through blocks of IP addresses, an ambitious hacker could have incrementally added the number 1 to the end of a targeted address and see a different Charter customer’s account details each time.

“Personal information leakage as a result of such a vulnerability opens customers up to being attacked on other services such as email providers, cellular providers, and work-related functions with many untold consequences,” said Hector “Sabu” Monsegur, a former black hat hacker and security consultant.

Reuters: Charter Deal to Acquire Bright House Networks is Dead

Phillip Dampier May 7, 2015 Bright House, Charter, Competition, Consumer News No Comments

brighthouse1Bright House Networks, the sixth largest U.S. cable operator, will abandon its preliminary $10.4 billion deal to be acquired by Charter Communications, according to a report from Reuters.

The deal with Bright House was contingent on the Comcast-Time Warner Cable merger getting completed. With that merger deal dead, Bright House’s owners – the Newhouse family – now believe they are better off remaining independent, at least for now.

Reuters reports discussions between the two companies are ongoing, but are likely to run out without a deal in about two weeks. That will leave intact Bright House’s agreement with Time Warner Cable to share volume-related discounts on programming and technology. With that agreement in place, there may be little interest from Bright House’s owners in another merger deal with a different company in the near future.

 

Charter Communications Tightening Credit Standards and Collections Activity

Phillip Dampier May 4, 2015 Charter, Consumer News No Comments

charter spectrum logoYour credit worthiness now plays a more important factor in determining whether you can sign up for service with Charter Communications, and if you fail to pay the company has stepped up collection efforts to bring past due or canceled accounts up to date.

Charter Communications reported to investors it lost more than 7,000 video customers during the first quarter of 2015, many lost to the company’s tightened credit policies. Customers with challenged credit will be asked to pay a substantial deposit before cable service will be provided and those who lost service will have to bring their accounts current before service can be restored.

Thomas Rutledge, CEO of Charter Communications, told investors on the company’s quarterly conference call Charter could no longer depend on picking up video customers that used to steal analog cable service. Charter largely terminated analog service last year, forcing unauthorized customers to subscribe legally or find another provider.

Rutledge

Rutledge

Charter is hoping its new Spectrum Guide software, now being tested, will help improve video service for customers. The new cloud-based user interface is supposed to make search and discovery easier and better supports Charter’s on-demand video offerings. Spectrum Guide is expected to launch in Reno and St. Louis in the next few months.

“Over the coming months, we’ll increase the number of on-demand titles we have on our set-top boxes and on the Charter TV app by a factor of three,” said Rutledge. “The coming months will also see the wider rollout of our Worldbox, our new more advanced and less expensive downloadable security infrastructure in several markets.”

Rutledge emphasized Charter intends to continue emphasizing its full video packages and will not follow others testing slimmed down packages and a-la-carte channel selection. Rutledge told investors he doubts any of the current lower-priced packages with fewer TV channels will prove compelling to customers.

Charter’s chief financial officer reported Charter spent $23 million on transition costs related to the company’s failed deal with Comcast to spin off certain customers to a new entity – GreatLand Connections, which has since been terminated. That contributed to an increase in the company’s expenses, joined by increasing cable programming costs.

Rutledge called the Comcast transaction “distracting” and its all-digital conversion project “very disruptive” to customers.

“I guess when you think about our incentives as a company, our biggest opportunity was the transaction that was in front of us,” Rutledge said. “We were about to divest 40% of our business. And so, our focus was somewhat distracted. But all in all, the operational issues of changing – credit policies changing year-over-year, outcomes as a result of the termination of the all-digital project and the management of the service issues around the all-digital project, we’re comfortable with where we are, and we are comfortable with our growth prospects for the year.”

Time Warner Cable and Charter Both Talking to Bright House Networks About Acquisition Deal

Phillip Dampier April 30, 2015 Bright House, Charter, Time Warner Cable No Comments

brighthouse1In the last week, executives from both Charter Communications and Time Warner Cable have talked to the Newhouse Family, controlling owner of Bright House Networks, about an acquisition of the cable company.

Time Warner may hold the stronger hand. In addition to being a much-larger and wealthier cable company, Time Warner has the advantage of a long-standing partnership dating back to the early 90’s with Bright House in which Time Warner shares its volume discounts on cable programming and technology with Bright House in return for an annual fee. As part of that arrangement, Time Warner has the right of first offer if Bright House ever chose to sell. If Time Warner matches or beats a competing offer, such as that now on the table from Charter Communications, it wins Bright House for itself.

Bright House decided it had to sell to someone after the Comcast-Time Warner Cable merger threatened to end its arrangement with Time Warner. Bright House would pay substantially more for programming and equipment without the volume discounts Time Warner received. With the Comcast deal off the table, Time Warner remains an acquisition target.

Charter_logoBright House is coveted by Charter as a stepping stone to a much larger acquisition of Time Warner Cable. Charter’s balance sheet is loaded with debt and its stock isn’t worth as much as that of Time Warner Cable. Combining Bright House’s two-million subscribers with Charter’s own five million customers strengthens Charter’s balance sheet and increases its borrowing capacity as it prepares to acquire Time Warner Cable for a second time.

Time Warner Cable’s interest in Bright House would make life more difficult for Charter, preventing the company from leveraging a quick deal for Time Warner. It also would make Time Warner Cable considerably more expensive (and complex) to acquire. In January 2014, Charter offered $132.50 a share to Time Warner Cable shareholders to acquire the cable company. Time Warner Cable executives immediately recommended shareholders reject the deal as undervalued. Today Time Warner stock is worth around $156 a share, meaning Charter would have to offer at least $160 a share, and probably more than that, to interest Time Warner executives.

timewarner twcThe Newhouse family is sitting in a lucrative position as it is courted by the two larger cable operators. One of those familiar with the talks suggested Time Warner was offering the Newhouse family influence in a combined Bright House-Time Warner Cable, because its offer would leave the Newhouse family as the largest individual shareholder of the combined company. Charter’s offer would hand power to John Malone’s Liberty Broadband, and leave the Newhouse family with little, if any voice.

Based on that, the Newhouse family may gravitate towards Time Warner Cable unless Charter significantly sweetens its deal and Time Warner drops out. With the Comcast-Time Warner Cable merger in tatters, both sides have a 30-day “good faith” period to renegotiate and tweak their respective offers.

Despite all that, Bright House may decide not to sell after all, at least until after the bigger players settle their own deals and acquisitions. In that case, Charter may have other targets in mind. At the top of the list are Mediacom and Suddenlink.

Wall Street Investment Bankers Start Worrying They Won’t Get Their Fat Fees if Comcast Merger Fails

merger smash

With regulators considering rejecting Comcast’s $45 billion merger with Time Warner Cable, investment bankers hoping to reap fat fees “advising” Comcast and Time Warner Cable about the deal are starting to panic they won’t get paid.

Although a merger flop won’t hurt giants like JPMorgan Chase, which operates a 24/7 cash vacuum, continuously sucking fees from companies engaged in Mergermania, smaller “boutique” investment banks like Allen & Co., Centerview Partners, and PJT Partners don’t have that luxury.

Reuters reports some of the smaller investment banks involved in the deal are now on edge, worried they won’t get their share of at least $140 million in investment banking advisory fees that would be paid to complete the Comcast-Time Warner Cable merger deal.

“Big banks have many deals going on, and they can afford to lose one more, even though it is painful. Smaller firms are less diversified, so for them it’s much more painful,” Campbell Harvey, a professor of international business at Duke University’s Fuqua School of Business, told Reuters.

But crying towels are also being readied for investment bankers involved in two side deals involving Charter Communications, which are likely to also fall apart in a chain reaction if the Comcast-Time Warner Cable merger dies.

dominoesCharter has deals pending with both Comcast and Time Warner Cable to launch GreatLand Connections and have plans to takeover Bright House Networks, both contingent on the Comcast-Time Warner Cable merger getting approval.

Those two transactions will bring another $170 million in fees to investment bankers, with JPMorgan Chane, former top Morgan Stanley banker Taubman, and Barclays Bank splitting $51-68 million in fees between the three firms.

Time Warner Cable’s own advisers are waiting for $57-75 million in fees as well, among them Morgan Stanley, Allen & Co., Citigroup, and Centerview Partners.

To understand how important the fees are to smaller bankers, Taubman was ranked 23rd in mergers & acquisitions fees in 2014. Without the Comcast deal, Taubman drops out of the top-100.

Some bankers may have negotiated a token fee to be paid by Comcast and Time Warner Cable if the deal falls apart. Most estimates suggest usual fees amount to around 10-15 percent of the amount they would collect if a merger is successfully completed.

Chances of Comcast/Time Warner Cable Marriage Dwindling This Morning

http://www.phillipdampier.com/video/Bloomberg Will the DOJ Kill the Comcast TWC Merger 4-22-15.flv

Richard Greenfield from BTIG Research appeared on Bloomberg TV this morning to talk about the rapidly decreasing chances the Comcast-Time Warner Cable merger will make it past the Justice Department. The next question: Will Charter Buy Time Warner Cable next or will Time Warner Cable make a power play and buy Charter? (3:24)

It’s Official: Charter Communications Buys Bright House Networks in $10.4 Billion Deal

Charter_logoCharter Communications today officially announced it will acquire control of Bright House Networks in a $10.4 billion deal the two companies are calling a “partnership.”

Widely anticipated, the deal will help Charter in its quest to become the second largest cable operator in the country, up from fourth place.

Bright House is the sixth largest cable operator, serving almost two million video customers in central Florida including Orlando and Tampa Bay, as well as Alabama, Indiana, Michigan, and California.

The deal will establish a partnership between Charter and Bright House’s current owner, Advance/Newhouse. But nobody will doubt who is in charge. Charter will own 73.7% of the venture, leaving the Newhouse family with a minority share of 26.3%. Bright House shareholders will receive shares of New Charter stock.

brighthouse1The deal is partly contingent on Time Warner Cable, which has a right to acquire Bright House for itself as part of a long-standing partnership between the two cable companies on programming and technology matters. But such an acquisition now seems remote, considering Time Warner Cable remains tied up in its year-long effort to be acquired by Comcast. An even larger Time Warner Cable would further complicate that transaction in Washington, where regulators are clearly concerned about supersizing Comcast. Since some regulators count Bright House customers as de facto Time Warner Cable customers, having Bright House acquired by Charter would seem to reduce Comcast’s influence over American broadband and cable television by cutting its combined market share from 29 to 27 million subscribers.

The Charter Sucks website could soon be getting more traffic.

The Charter Sucks website could soon be getting more traffic.

But Charter is also dependent on the Comcast deal closing, because that transaction delivers Charter another 2.5 million Time Warner and Comcast castoffs that will be sold service under the brand GreatLand Connections. The combination of those subscribers and Bright House will make Charter the second largest cable operator in the country.

Unfortunately for customers, Charter isn’t even close to second place in customer satisfaction or service. Beyond the very active Charter Sucks website, every consumer satisfaction measurement firm places Charter substantially below average in service, satisfaction, and pricing. Bright House scored on the high side.

“From the frying pan into the fire,” lamented Sam Pama, a former Bright House customer turned FiOS fan in Tampa. “First Frontier bought Verizon FiOS in Florida and now Charter is buying Bright House. Both treat their customers like crap.”

One piece of good news: Charter quietly shelved their usage caps months ago and Frontier has only toyed with them in the past, taking significant heat from Stop the Cap! before backing off. Neither are expected to slap usage limits or usage billing on customers in the foreseeable future.

Charter Cable in Talks to Acquire Bright House Networks in an All-Stock Deal; Deal May Still Fall Apart, Source Says

charterCharter Communications is in talks with Si Newhouse, Jr., the billionaire owner of Bright House Networks, to acquire the cable operator in an all-stock deal that could be worth over $12 billion, according to a report by Bloomberg News.

Bright House Networks serves 2.5 million customers, primarily in central Florida but also in parts of Alabama, Indiana, California and Michigan. Bright House has been closely controlled by the Newhouse family and has avoided efforts to consolidate the cable industry for more than two decades.

The deal is not yet finalized, according to two people asking not to be identified discussing confidential details of the deal. A side dispute over who will control voting shares of Charter after any acquisition remains at issue. John Malone’s Liberty Broadband, the largest single shareholder of Charter, is said to be seeking a larger ownership share of Charter Communications in what analysts expect will be a gradual takeover of Charter by Malone.

This afternoon, Bright House confirmed acquisition talks are underway.

brighthouse1“While we have had conversations with many parties about this transaction, we do not have an agreement with anyone regarding future plans for Bright House,” a company spokeswoman said in the statement.

The deal may also depend on whether regulators approve the merger of Comcast and Time Warner Cable. Time Warner Cable currently represents Bright House in most cable programming negotiations and the two cable companies have closely worked together on technology and services for more than a decade. That collaboration is likely to end if the Comcast merger is approved, stranding New House as a small independent operator.

Charter was long-expected to make offers to acquire other cable operators in its quest to grow larger, especially after failing in its bid to acquire Time Warner Cable for itself. An acquisition of Bright House by Charter would allow the company to further expand its presence in the south and midwest where it focuses most of its cable operations.

But it is not a done deal yet. The talks between Charter and Bright House could still fall apart and may not result in a deal, one source cautioned.

http://www.phillipdampier.com/video/Bloomberg Charter in Talks to Buy Newhouse Bright House Networks 3-12-15.flv

Bloomberg News reports Charter Communications is in talks with the Newhouse family to acquire Bright House Networks in an all-stock deal. (1:22)

Charter Communications Quietly Eliminates Usage Caps That Were Rarely Enforced Anyway

charter spectrum logoCharter Communications has quietly dropped usage caps and allowances from the company’s terms and conditions, once again giving Charter broadband customers unlimited access to the Internet.

Like Cox Cable, Charter almost never enforced their usage caps, which were specified as 100GB for its “base” service, 250GB for “Plus” and “Max” tiers and 500GB for “Ultra” service. Customers threatening to cancel service over usage cap matters were assuaged with a commitment by retention specialists that the caps were just a “guideline” and would not be enforced except in the most egregious instances of customer “overuse” of the Internet.

In place of the caps, Charter has returned to boilerplate language found in almost every ISP’s Acceptable Use Policy:

Excessive use of bandwidth that in Charter’s sole opinion, places an unusually large burden on the network or goes above normal usage [is prohibited]. Charter has the right to impose limits on excessive bandwidth consumption via any means available to Charter.

Customers routinely exceeding a terabyte of usage a month have never been contacted by Charter, so such usage apparently does not place a burden on their network. However, Charter also reserves the right to cut your speeds through “reasonable network management tools,” some that may now be forbidden by the FCC’s Net Neutrality policy:

Charter uses a variety of reasonable network management tools and practices consistent with industry standards. In the event the periods of congestion necessitate such management, Charter has available the following tools and practices (without limitation and as may be adjusted over time): (i) use of an upper limit of bandwidth allocated for uploading of files during congested periods; (ii) Subscriber Traffic Management (STM) technology to temporarily lower the priority of traffic with the greatest impact on peak congestion; (iii) spam filtering and detection techniques; and (iv) measures to protect the security and integrity of its network, resources and subscribers. In limited instances if employed, these techniques may affect the throughput rate at which subscribers may send and receive data, the ability of users to establish session connections within the network, or result in the delay of certain traffic during times of peak congestion.

Charter has “simplified” their Internet offers down to two for most customers: 60/4Mbps for Spectrum Internet ($59.99) and 100/5Mbps for Internet Ultra ($109.99). A source at Charter tells Stop the Cap! the company is conducting very limited trials raising speeds to 100/25Mbps for its base package and boosting its Ultra tier to 300/50Mbps, in case fiber competitors arrive. Those tests are not expected to become widespread however as the prevailing view at Charter is to wait until it deploys DOCSIS 3.1 and then raise speeds to 300/50Mbps for its entry-level package and 500/300Mbps for Ultra.

Starting in January, Charter began notifying its broadband-only customers it was raising prices $5 a month (from $54.99 to $59.99).

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  • Susan: After diligently watching my credit score for over a year and how negative as well as positive postings affect it, I have a hard time believing that o...
  • David Therchik: An intense investigation needs to put into this! As soon as one starts I bet they'll stop charging/cheating people from over usage. Before they bought...
  • Charles Bingham: I did but customer no service was no help - said it did no good to have pass word with symbols, cap and small letters and #'s. IF only I had an alte...
  • Phillip Dampier: That assumes this customer had access to a working usage meter and notification messages and ignored them. Evidently it was big enough of a problem fo...
  • Are you kidding me...: "Over the years" people are using the internet differently. If your bill went up, you have usage. Responsible would be calling and talking to them ab...
  • Charles Bingham: Actually my usage has decreased over the years as I sold my business and only kept the internet for a few tax returns that I still do, no employees no...
  • Are you kidding me...: This entire article reeks of "poor me, I'm a victim and I can't be responsible about my own Internet usage, my own bills or my own actions." Grow up....
  • a gci customer: even with the new plans, you are still data capped, they just speed rate you at that point vs charging you for overages. You are given the ability t...
  • random-gci-customer: How do you think their Senior Vice President of Consumer services funds his opulent exotic car collection??? https://www.dropbox.com/s/uj7yh1r7hcfc03...
  • whyatt: Well this is what I know. There are 4 internet plans called r:10 r:50 r:100 and RED. And these plans are cheaper than the old plans. Those old plans u...
  • oobovigif: Well I guess they don't want the Tax Breaks anymore either. They just need to seriously Stop with all this BS about lack of Spectrum. They have Plenty...
  • Charles Bingham: Our office's bill has run around 69-70 dollars per month for years, we recently were charged $600 for overages, which no one can explain....

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