Comcast Corp. is ready to send its Twin Cities customers to a new provider of cable and Internet service, under a deal the company announced Monday.
The Business Journal reports that under an agreement with Charter Communications, Comcast would spin off 2.5 million subscribers to a new publicly-traded company that Charter would manage.
The deal is contingent, though, on federal regulators approving Comcast's $45 billion acquisition of Time Warner Cable. Analysts say Comcast's readiness to shed some of its customers is meant to appease the antitrust concerns of regulators.
One of the leading critics of Comcast's Time Warner acquisition is Sen. Al Franken. The Minnesota Democrat has argued the deal would create a Comcast that is too big and has too much power to raise prices for consumers.
USA Today reported Monday that the Time Warner acquisition looks likely to be approved by the Justice Department but its prospects of clearing the Senate panel on which Franken sits are uncertain.
The newspaper made note of this passage in a letter written by Franken: "I am deeply concerned that Comcast's proposed acquisition of Time Warner Cable would give Comcast both the power and the incentive to act as a gatekeeper on the Internet, raising costs and limiting choices for consumers."
As BloombergBusinessweek reports, the three-way deal announced Monday also calls for Charter to buy 1.4 million Time Warner Cable customers and for Charter and Comcast to swap 1.6 million customers.
The net effect of the dealing would bring Comcast's share of the U.S. cable and satellite TV market under 30 percent, which Reuters reports is a key step toward pleasing regulators. In addition to Twin Cities cable and Internet subscribers, those in the Detroit market would also move from Comcast to the newly-created company.
Businessweek says the managing director of Guggenheim Securities described Monday's announcement as "... a small but welcome gesture to regulators.”
One of the groups critical of Comcast's Time Warner Cable acquisition was unswayed. The policy director of Free Press issued a statement reading in part: "This convoluted transaction may change the final tally of subscribers under the proposed merger, but it can't change the fact that this deal is a big loss for innovation and competition."