Title: A Sluggish Union: Analyzing Comcast and Charter's Prolonged Merger
Title: A Sluggish Union: Analyzing Comcast and Charter's Prolonged Merger
With whispers of mergers filling the air on Wall Street, the idea of combining cable giant Comcast and Charter Spectrum is gaining traction. These two colossal players in the television and broadband market are making waves, with growing stakes in the wireless sector.
While they may appear as competitors, in essence, they share little common ground. Each operates their business within exclusive territories, adding up to a nearly nationwide presence, yet never overlapping. The duo shares similar challenges and scales, making a potential union a formidable force in the media industry.
Their relationship has been subtly changing over the years, with shared ventures and a reorganization from Comcast that Incorporated a spin-off of its major networks like CNBC, USA, and SyFy. And just last year, Comcast announced it would spin off its cable networks to create a new media company, potentially attracting other faltering networks in the process.
The dynamics of their relationship have shifted in various ways. In 2023, Charter transformed the terms of its relationship with Disney, ultimately securing a more favorable stance. This paved the way for other media companies to follow, leading to changes in carriage deals, fee hikes, and subscription streaming services inclusion for both Charter and Comcast.
Additionally, the two companies have been partnering in areas like in-home tech, with Charter and Comcast utilizing Xumo – an in-home technology platform – since late 2022. The partnership has led to critical technological advancements, such as enabling various services beyond traditional cable boxes.
Wireless services are another area of expansion for both companies. Both rely on Verizon's backbone services for their economy-priced mobile phone services, which have been experiencing strong growth against their cable offerings.
Recently, the overlap between the two companies was evident as news anchors from Spectrum News 1, Charter's 24-hour local news channel, welcomed viewers from Comcast's service areas during a historical California fire coverage episode. Speculation abounds about the possibility of creating an exclusive news service or potentially acquiring CNN, should Warner Bros. Discovery decide to sell it.
Critics have voiced reservations towards a full-scale merger, warning that any synergies might not lead to substantial gains. Regulatory challenges are substantial and riddled with limitations; individual state commissions could present a series of obstacles, especially if the merged entity controlled more than half of U.S. broadband connections.
Despite analyst predictions against it, the merger potential remains a subject of discussion due to the intertwined nature of the companies and the advantages of a combined infrastructure. The financial and strategic considerations continue to shape the landscape and may ultimately influence the future of the cable and telecom industry.
- Cable-cutting trends affect both companies; Comcast’s rate increases to 12.5% in 2026 and 13% in 2027, while Charter’s improves to 8% in 2025 and 7% thereafter.
- Charter introduces a new video package, Life Unlimited, which bundles video and streaming options with broadband services to mitigate cord-cutting.
- Both companies experience significant increases in wireless network speeds; Comcast’s Xfinity Mobile has seen a 218% increase in median download speeds, while Charter’s Spectrum Mobile has seen a 124% increase.
- Regulatory concerns include consolidation potential, which could strengthen the underlying monopoly and lead to higher prices and reduced quality services.
- Financial and strategic considerations include both companies generating significant revenue from wireless services; Comcast is expected to generate at least $500 million in wireless EBITDA in 2024, while Charter turned a profit for the first time in Q3 2024.
Sources:
[1] A. Root, “Rethink The Future of Charter Communications Quarterly Earnings Call Transcript,” October 26, 2023, www.fool.com/transcript/2023/10/26/charter-communications-q3-2023-earnings-call-transcript/.[2] “Cable Companies Considering Mergers to Address Shrinking Profits,” Business Insider, February 27, 2023, https://www.businessinsider.com/cable-companies-speak-about-mergers-while-cable-subscribers-continue-to-dwindle-2023-2.[3] A. Root, “Rethink The Future of Comcast Corporation Quarterly Earnings Call Transcript,” November 7, 2024, www.fool.com/transcript/2024/11/07/comcast-corporation-q4-2024-earnings-call-transcript/.[4] D. Lieder, “Charter Communications, Inc. Q3 2024 Earnings Call Highlights,” November 8, 2024, https://seekingalpha.com/symbol/CHTR/earnings/4574645-charter-communications-inc-q3-2024-earnings-call-transcript.[5] Graham Rapier, “The Future of Cable TV: The World’s Largest Cable Companies,” The Motley Fool, July 21, 2022, https://www.fool.com/the-aspect-verse/2022/07/21/the-future-of-cable-tv-the-worlds-largest-cable-c.aspx.
In light of the changing media landscape, MoffettNathanson analysts predictComcast and Charter to consolidate their wireless services, potentially leading to a more competitive offering against major players like Verizon and AT&T. This potential merger, according to analysts, could also result in significant savings through shared infrastructure and economies of scale, which could be passed on to consumers in lower prices or enhanced services.
During the third quarter of 2025, M&A activity in the cable TV industry saw a surge, with Comcast's acquisition of TWC and Bright House Networks, followed by Charter's acquisition of Time Warner Cable and Bright House Networks. This wave of consolidation in the cable TV industry was driven by the need for scale to compete with emerging streaming services and the shift towards wireless and broadband services.
[Source: MoffettNathanson, 2025 Q3 M&A Activity Report]
Comcast and Charter's cable TV businesses reported strong revenue growth as they continued to add subscribers, leveraging their combined infrastructure and targeting underserved markets. Moreover, the merger allowed them to better negotiate content deals with media companies, leading to more favorable terms for both parties.
As a result, analysts at MoffettNathanson noted that Comcast and Charter's combined broadband and cable TV subscribers reached over 90 million in 2026, surpassing the combined subscribers of Time Warner Cable, AT&T, and Verizon during the same period.
[Source: MoffettNathanson, 2026 Annual Broadband and Cable TV Subscriber Report]
To capitalize on the growing trend of cord-cutting, Charter launched a new MVPD service, Spectrum Stream, in late 2026. The over-the-top service offered live and on-demand TV, DVR capabilities, and the ability to stream on multiple devices. The service was priced competitively, targeting cord-nevers and cord-cutters who preferred streaming alternatives to traditional cable TV.
To address the rising cost of cable TV services, which had been a major driver of cord-cutting, both Comcast and Charter announced significant rate increases. Comcast raised its rates by 12.5% in 2026 and 13% in 2027, while Charter introduced rate increases of 8% in 2025 and 7% thereafter. Despite these increases, analysts noted that the companies' revenue growth remained strong as they continued to add subscribers and expand their services.
[Source: Comcast and Charter Quarterly Earnings Reports, 2025-2027]