Earlier this year, Charter Communications, Incorporated and Cox Communications announced a $34.5 billion proposed merger. If completed, the combined company would become both the largest cable television provider and the largest broadband provider in the country.
At first glance, one might be concerned about a proposal to merge the second and third-largest cable providers into a single behemoth. But to describe the merger in these simplistic terms fails to appreciate both the challenges facing companies in mature industries and the revolutionary changes affecting the telecommunications industry. This proposed deal is not a power grab, but a rational response to a maturing, intensely competitive market. That’s the argument that I’ve made in my latest article as part of the Free State Foundation’s Perspectives series.
Both the traditional pay television and the fixed broadband industries are facing severe headwinds, and neither Charter nor Cox is immune. From the article:
According to a recent FCC filing, Charter’s video subscribers have declined by nearly a quarter since 2016, to approximately 12.7 million, while Cox’s video base has been cut in half to 1.7 million. Broadband, which bolstered cable company revenues as pay TV began to decline, is now beginning to follow the same trajectory. Facing competition from new intermodal platforms such as fixed wireless satellite, traditional wireline connections have plateaued since 2021.4 Charter reported a net loss of 117,000 wireline broadband subscribers for the second quarter of 2025, and analysts estimate that Cox (which does not regularly report subscriber numbers) is experiencing similar loss trends.
Consolidation is a rational and predictable response to these challenges. The companies estimate about $500 million in annual savings within three years, achieved largely through eliminating redundant systems and spreading fixed costs—such as customer service, network operations, and compliance—across a larger base. In competitive markets, those efficiencies typically translate into lower prices, faster upgrades, and better service for consumers.
In the broadband market, the combined company will achieve better economies of scale and can extend Charter’s operational strengths across the entire Charter-Cox footprint. Charter has already begun rolling out DOCSIS 4.0, the newest cable broadband standard. The merger will allow the company to accelerate this rollout across the Cox footprint, reducing the costs per passing location and bringing next-generation broadband to more customers faster. It will also allow Cox to leverage Charter’s in-house broadband CPE, eliminating its reliance on third-party vendors and providing equipment more tailored to optimize network performance.
The merger will also improve the company’s competitive position in the pay television market. From the article:
One of an MVPD’s biggest costs is programming, the cost to acquire the content that the company bundles into a package for consumers. The combined company will have a larger footprint and more subscribers, which will allow a better bargaining position when negotiating agreements with cable programmers. Moreover, like broadband CPE, Cox pays an outside vendor for video services, while Charter operates an in-house platform. The combined company will benefit from extending Charter’s system into Cox’s footprint and eliminating the double marginalization that Cox currently pays. The merger will also allow Cox customers to benefit from Charter’s price and bundling options.
The merger will also better position the company to diversify into the mobile and enterprise spaces:
Like other cable providers, Charter and Cox have entered the mobile service market, each operating a hybrid MVNO network that relies primarily on wi-fi hotspots to offload traffic to the company’s broadband network, supplemented by a wholesale MVNO agreement with a nationwide wireless provider. Charter’s Spectrum Mobile has been particularly successful, adding 10 million lines since its 2018 launch to become the country’s fastest-growing mobile provider… The merger would allow these MVNOs to offload traffic across a broader geographic footprint, which reduces costs and improves performance by reducing their reliance on third-party wholesale network access…
In the enterprise space, Cox brings valuable assets including Segra, a leading regional fiber network, and RapidScale, a cloud and managed IT provider.22 Combining these capabilities with Charter’s national reach and extensive fiber backbone will enable the merged company to offer integrated connectivity, cloud, and cybersecurity solutions to business clients of all sizes, competing more effectively with established national providers.
Importantly, the merger poses little risk of competitive harm because the companies’ service areas barely overlap, so the merger will not reduce the number of head-to-head competitors in any market. Overall, the proposed deal will improve the combined company’s competitive position in its legacy markets while positioning it to act as a potential disruptor in newer sectors. In an industry where regional players must now compete in national arenas, this transaction represents both a rational response to market evolution and a benefit to the public interest.
You can read the full analysis, including endnotes, here.
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