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 Comcast is studying what could be a two-phase process, where Charter
would first acquire up to 1.5 million subscribers directly from
Comcast, the source said on condition of anonymity because
discussions were continuing and a final agreement had not been
struck.
Comcast would then spin off the rest of the 2.5 million subscribers
into a separate, publicly traded company, which Charter would take a
minority stake in, the source added.
The roughly 4 million subscribers are worth between $18 billion and
$20 billion, said the source.
Comcast and Charter would also swap about 1 million cable
subscribers, including Charter's subscribers in Los Angeles. It was
not yet clear what markets Comcast would swap with Charter or spin
off, although the companies would likely trade subscribers adjacent
to their exisiting markets.
Any agreement the companies reach would be contingent on Comcast's
$45.3 billion acquisition of Time Warner Cable being approved by
regulators, a process that could take many more months while the
Justice Department and U.S. Federal Communications Commission study
that deal.
While the source characterized the negotiations as serious, the deal
could still fall apart and other cable companies and private equity
firms may be interested in the divestitures. Representatives for
Comcast and Charter declined to comment.
The Wall Street Journal and Bloomberg both reported parts of the
deal earlier on Tuesday.
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Comcast and Charter originally teamed up last year to try to find a
way to carve up Time Warner Cable. But talks soured as the two
bickered over price and the feasibility of engineering a split of
the No. 2 U.S. cable operator.
Charter, backed by billionaire John Malone's Liberty Media Corp, had
pursued Time Warner Cable for months before Comcast swooped in with
a surprise bid.
Comcast's chief financial officer, Michael Angelakis, said on
Tuesday there was no timeline governing when the company will make a
decision regarding the divestitures.
Speaking on a conference call following Comcast's
better-than-expected earnings, the CFO said the company was studying
a "number of potential structures" and wants to pursue divestitures
in the "most tax-efficient way possible.
Any cash proceeds from a spinoff or sale would be used for returning
capital to shareholders, he said.
(Reporting by Liana B. Baker; editing by Bernard Orr)
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