NFLX Netflix Inc

By John D. McKinnon 

The Federal Communications Commission said Friday it had formally voted to approve Charter Communications Inc.'s acquisition of Time Warner Cable Inc., creating a telecommunications giant while imposing tough operating restrictions on it.

The conditions placed on the merger will help mitigate threats to online video competition that could be exacerbated by cable-industry concentration, officials say.

Specific conditions will require some degree of "overbuilding" of cable within other cable companies' territories, something the industry traditionally hasn't been required to do.

The deal also compels the merged company not to impose data usage caps on customers for a number of years, and prohibits use of pay-TV contract language that critics believe has made it harder for media companies to offer content online.

In a statement, Charter officials said many of the conditions grew out of its existing practices.

"The significant benefits of these transactions are clear: greater competition; more consumer and [video-friendly] broadband policies; broader access to affordable broadband; and added U.S. jobs," said Tom Rutledge, president and chief executive officer of Charter. "Charter will be a stronger competitor in the broadband and video markets, well positioned to deliver these benefits and more to consumers."

The approval has been expected since FCC Chairman Tom Wheeler announced about two weeks ago that he was recommending the deal. The Justice Department also signed off.

The merger will create the second-biggest broadband provider in the country, after Comcast Corp., and the third-largest pay-TV company, serving more than 17 million video customers, trailing only AT&T Inc. and Comcast. As part of the transaction, Charter also agreed to acquire smaller operator Bright House Networks.

The deal must still be approved by regulators in California, who are expected to vote next week.

Some consumer groups criticized the deal, but it drew far less concern than a similar proposed merger of Comcast and Time Warner Cable last year. That deal fell apart amid regulators' opposition.

Write to John D. McKinnon at john.mckinnon@wsj.com

(END) Dow Jones Newswires

May 07, 2016 02:49 ET (06:49 GMT)

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