After an often-grueling 11-month approval process, Charter Communications is getting ready for the hard part of its merger with Time Warner Cable: putting it all together.
The $78.7 billion deal will create a new powerhouse in the distribution space — CEO Tom Rutledge said the company will go simply by “Charter” after the deal is closed — but one that, at least during the first few months of operations, has the potential to be confusing to customers. Aside from changing logos on trucks and letterheads, the new Charter will have to integrate a diverse number of programming, high-speed data and voice packages into its own product set.
For example, Charter’s minimum data speed is 60 Megabits per second, while Time Warner Cable’s lowest broadband-Internet tier is a 3-Mbps service. TWC also has begun deploying a TWC Maxx service — with data speeds up to 300 Mbps — in several markets.
Charter will have to implement a new organizational structure, centralizing corporate, marketing, sales and product development over a period of six months after the close and organizing its field-operations group into 11 separate regional areas.
Charter said it plans to operate customer care as it is currently doing at each of the three organizations today. Over time, customer care will migrate to the Charter model of in-house, U.S.-based call centers, the company said, although that process could take several years.
“It will take some time to roll out new pricing and packaging across Time Warner and Bright House,” Rutledge said on a conference call with analysts last week. “The plan is, as I described, to continue the all-digital project that is going on currently at Time Warner and to initiate a similar project at Bright House in the Tampa area and, as we do that, to roll out new pricing and packaging behind it.”
Charter also will have to manage the all-digital migration of the combined company’s networks. Charter already completed its own digital migration, and Time Warner Cable started the transition last year.
At the closing of the deal, Charter will briefly postpone any new digital rollouts at both TWC and Bright House, and then restart them by rolling out fully enabled two-way set-tops in every market. At the same time as the all-digital rollout, Charter will introduce new products and packaging, beginning with the TWC and Bright House systems that have already gone all-digital.
Those initiatives — all-digital and the new packaging and pricing — are slated to be completed across the entire TWC and Bright House footprint (about 36 million homes) by the end of 2018.
While integration issues have caused larger companies to stumble — including TWC, which ran into problems in Los Angeles after acquiring Adelphia systems there in 2006 — Charter’s operations team has proven itself time and again with the current company.
Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said, as with any situation, there may be instances where the company takes “one step back before it can take two steps forward.”
He doesn’t anticipate any major problems, though.
“The Charter guys have demonstrated a lot of success,” Wlodarczak said. “I see no reason why they are going to have material issues.”
