Telecom behemoth Verizon is reportedly eyeing a possible merger with Charter Communications, a move that could further transform an already fast-evolving telecom/cable/communications industry.
The Wall Street Journal, which first reported the story yesterday, cited "people familiar with the matter." Neither Verizon nor Charter has issued any official statement regarding a potential deal and Reuters yesterday published a separate report saying Verizon had made no such offer to Charter.
Both companies have already expanded their market reach through a number of mergers and acquisitions over the past few years. With nearly 26 million residential and business customers, Charter claims to be the second largest cable operator in the U.S. Verizon, meanwhile, is the largest provider of wireless services and also offers wireline, Internet and television services.
'New Opportunities To Evolve'
While noting there is "no guarantee a deal will materialize," The Wall Street Journal reported that Verizon CEO Lowell McAdam "has made a preliminary approach to officials close to Charter." The report added that it was "unclear" whether Charter's leadership would be receptive to such an offer.
"Buying Charter would take Verizon down a different path from rivals Comcast Corp. and AT&T, who have bet big on combining content and distribution -- Comcast, through its ownership of NBCUniversal, and AT&T with its pending acquisition of Time Warner Inc.," the Journal article noted. "Verizon, by contrast, would be doubling down on its historic strength in distribution, as an owner of pipes that carry web traffic."
In its Q4 2016 earnings report Tuesday, Verizon said it "continues to transform its business and enter new markets." The company reported quarterly revenues of $32.3 billion, down 5.6 percent from the fourth quarter of 2015. However, Verizon said it had seen net growth in the number of both wireless and fiber Internet customers.
"The continuous changes from technology advances and the competitive environment will provide us new opportunities to evolve and develop innovative solutions to continue to be a key player in this dynamic market," Verizon executive vice president and CFO Matt Ellis said during Tuesday's earnings call. "As we look at our current and pending assets in the media and IoT businesses, we will be focused on integrating these assets by increasing global scale organically and further enhancing cross-platform content sharing opportunities."
Regulatory, Political Ifs
Verizon is currently in the process of acquiring the digital media arm of Yahoo for $4.83 billion, although the deal has been complicated by news of two major hacks against Yahoo in 2013 and 2014 that affected more than 1 billion user accounts. The acquisition is aimed at boosting Verizon's position in mobile media technology and adding new sources of digital ad revenues.
Charter Communications, meanwhile, has expanded through a merger, completed in May, with Time Warner Cable. Charter also closed on its acquisition of Bright House Networks at the same time.
The Wall Street Journal report also noted that any proposed Verizon-Charter merger would first require approval by U.S. regulators. The report added that such a deal would also "pose a big test for new antitrust enforcers under the administration of President Donald Trump, who during the campaign expressed concerns about media consolidation."