“Welcome Development for Media” Charter Communications Stock (NASDAQ:CHTR) Slides as Concerns Grow about Merger

The recent announcement of communications stock Charter Communications (CHTR) and its plan to buy Cox Communications left some in the industry rather concerned about how the whole thing would settle in. But some reports suggest that this should be a good thing, if only slightly. But regardless, that did not stop shareholders from pulling back a bit, and Charter shares slipped modestly in Monday afternoon’s trading.

Craig Moffett, analyst with MoffettNathanson, noted that this should “…be viewed as a welcome development for media.” While some of Charter’s video partners may “squawk a little” if there is significant difference in carriage terms between Charter and Cox, Moffett noted that Charter previously “…has shown itself to be more committed to preserving video than any of its cable peers.” And, with the combined firm representing about 70% of the value of Comcast (CMCSA), the end result should be a powerful new player, even if there is technically one player less in the field.

There are some concerns that the deal might not pass regulatory muster, though admittedly, that is less of a concern now than it was in the Lena Khan era. Concerns from Hollywood, meanwhile, were somewhat mollified by the fact that cable television was a declining market to begin with. Thus, more studios are putting their focus on streaming services, which seem to be gaining in this era.

Not Alone

Other reports are echoing Craig Moffatt, including one report’s realization that “…the acquisition…won’t help cable TV as its (sic) being choked out by streaming. In fact, its (sic) likely that programmers will see less distribution revenue as deals originally made with Cox translate to the (less favorable to programmers) Charter Terms.”

Even Charter’s CEO, Chris Winfrey, noted that just losing customers at a slower pace would be considered a win for both Charter and its programmers. Winfrey noted that Charter’s “…video losses are probably the best in the industry,” which represents an oddly sad view of the landscape. The problem is that Winfrey is probably not wrong here.

Is Charter Communications Stock a Good Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on CHTR stock based on 10 Buys, five Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 55.45% rally in its share price over the past year, the average CHTR price target of $436.18 per share implies 3.42% upside potential.

See more CHTR analyst ratings

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