Charter Communications Evaluating Altice USA for Possible Acquisition; Is Charter Trying to Appeal to Streamers?
Charter’s Spectrum TV service is already bundled with Disney+, and the company could be pursuing Altice to lure more streamers into similar deals.
The winds of acquisition are blowing, and this time it’s Charter Communications that’s looking to pursue a major opportunity. A new report from Bloomberg indicates that Charter is evaluating whether an acquisition of Altice USA — a broadband and cable distributor with around 5 million American customers — is worth the investment, despite the declining value of pay-TV providers in the country.
- Acquiring Altice would allow Charter to make up for subscription losses from cord-cutting and broadband losses due to increased competition.
- No official deal has been put on the table by Charter, and the company may decide not to pursue an acquisition at all.
- Picking up Altice could give Charter greater leverage as it pursues more bundled streaming deals similar to its agreement with Disney.
Bloomberg reports that Charter’s proposed acquisition of Altice is still in its very early stages. Company executives are huddled with financial advisors to determine whether or not such a transaction is a good idea, and Charter may ultimately decide not to pursue the matter further. CNBC has confirmed that no Charter officials have reached out to Altice about the potential merger at this time.
Altice has around 5 million customers overall, whereas Charter has roughly 32 million cable and broadband internet subscribers in the United States. According to data released by Leichtman Research Group in November, Charter has around 14.4 million cable customers, whereas Altice has just north of 2.3 million. Both companies have been hit hard by cord-cutting, as each lost tens of thousands of subscribers in the third quarter of 2023 alone.
How Would Acquisition of Altice Help Charter With Streaming Providers?
Charter has been at the forefront of a movement to increase bundling of cable plans with streaming services. In 2023, Charter refused to restore Disney-owned cable channels to its Spectrum TV airwaves unless Disney allowed Spectrum TV subscribers free access to ad-supported Disney+ as part of their cable plan. Ultimately Disney relented, and Spectrum TV viewers were allowed to start signing up for their free Disney+ accounts in January.
The cable provider has made it clear that it wants to pursue more such deals with other streaming services; in fact, it has threatened to drop the channels of any media company that does not make a similar bundling agreement with its streamers. Acquiring Altice could give Charter even more leverage in such negotiations.
That’s because purchasing Altice would not only give Charter a greater share of the cable market, it would also gain millions of new broadband customers. Increasing its internet footprint would allow Charter to make the case to streamers that they would be growing their subscriber base substantially by bundling with Spectrum TV, since viewers would have access to the broadband internet needed to stream top on-demand services. Having a high-speed internet connection is critical for streaming on-demand video, and acquiring Altice would show that Charter is serious about continuing to expand its broadband customer base by any means necessary.
Paramount CEO Bob Bakish has signaled a willingness to bundle his streamer Paramount+ with more cable plans going forward, and Warner Bros. Discovery chief David Zaslav has done likewise. Streamers may not get the full amount of revenue per user from bundled cable subscribers as they do from customers who subscribe to their service directly, but they do get a segment of viewers who are highly unlikely to cancel their subscriptions since they’re getting the service for free. Disney also collects a prorated lump sum from Charter for all of the Spectrum TV subscribers who sign up for their free Disney+ accounts.
Charter has already teamed with Comcast on the Xumo joint venture, which includes both a digital platform and a streaming device, so a bundle of Peacock with Spectrum TV plans seems like a possibility as well. Charter has a meaningful opportunity to increase its leverage with streaming providers in making such deals going forward if it manages to boost its cable and broadband customer base by following through on its discussed acquisition of Altice USA.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”