A $34.5 Billion Merger Will Unite Cable Leaders Charter and Cox

The cable giants Charter Communications and Cox Communications said on Friday that they had agreed to merge, a colossal deal that would create one of the biggest TV and internet providers in the United States.

The deal, which values Cox at roughly $34.5 billion, presents a test for President Trump’s antitrust enforcers. While many deal makers had expected the Trump administration to be more permissive than the Biden administration, many on Wall Street have been surprised by early signs that a tough-on-deals stance may persist.

Charter and Cox argued that the deal would help them compete against big rivals, including “larger, national broadband companies” — read: Comcast, Verizon and others — as well as satellite service providers. They are also likely to argue that their cable networks don’t significantly overlap geographically.

Charter and Cox signaled in their news release they were eager to secure the Trump administration’s approval of the deal. The announcement said the merger “puts America first” by returning customer-service jobs from overseas, echoing the president’s campaign language. It also underscored the value of bringing “hyperlocal, unbiased news” produced by Charter’s Spectrum News stations to Cox customers, an apparent gesture toward mollifying the White House, which has been critical of the press.

Unmentioned in the news release was Axios, a scoopy Washington-based media organization owned by Cox Enterprises, the privately held parent of the cable business as well as firms in other industries, like agriculture and cars. The newly formed cable group would not own any national programming, the release said.

Under the terms of the merger, Charter will pay cash and stock, with the combined company set to take on the Cox name and sell consumer services under the Spectrum brand within a year of closing. Cox Enterprises would become the new company’s largest shareholder, with a 23 percent stake. The group expects to cut $500 million in annual costs within a few years of closing the deal, from “typical procurement and overhead savings.”

Charter’s stock rose more than 2 percent in early trading on Friday.

It isn’t the first time the two have discussed a merger: They held talks 12 years ago, and John Malone, a telecom billionaire and major Charter shareholder, had named Cox last fall as one of the company’s potential transaction partners.

Mr. Malone, an influential media mogul, has lately made several moves to reorganize his media holdings. Last year, Charter acquired Liberty Broadband, a telecommunications company partly owned by Mr. Malone. This year, he relinquished his seat on the board of Warner Bros. Discovery, which owns CNN and the Warner Bros. movie studio.

The Cox-Charter deal is one of the biggest takeovers announced this year, along with Google’s planned acquisition of the cybersecurity provider Wiz for $32 billion. And it may show that, at least for some corporate leaders, uncertainty over the economy, driven in part by Mr. Trump’s trade policies, isn’t enough to deter them from major investments and acquisitions.

But antitrust approval is needed, and the Trump administration, which moved early to block deals like Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks, has warned corporate America not to assume that all deals will pass muster.

“I don’t have an ideological predisposition against M.&A.,” Andrew Ferguson, the chair of the Federal Trade Commission, said last month. “It doesn’t follow, however, that I think it should just be open season” for deal-making, he added.

Cable executives have tested regulators’ appetite for consolidation before. In 2015, Comcast walked away from an attempt to buy Time Warner Cable amid regulatory pressure from the Obama administration. The next year, the Obama administration approved Charter’s $65.5 billion acquisition of Time Warner Cable and Bright House Networks, but imposed restrictions in the process.

One of Charter’s biggest rivals, Comcast, is pursuing a deal of its own. The cable and broadband giant announced late last year that it was spinning off its cable networks, including MSNBC, into a separate company. That firm, which was named Versant this month, is expected to make its debut this year.