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Some have pegged Charter Communications as a significant winner if Comcast and Time Warner Cable are allowed to merge since Charter will then jump from the fourth-largest cable operator in the U.S. to second largest.

Charter has agreed to a deal with Comcast which will result in Charter’s subscriber base increasing from 4.4 million to 8.2 million households. Charter will also buy 1.4 million existing Time Warner Cable subscribers for $7.3 billion.

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Before the merger talks with Comcast & Time Warner Cable, Charter had $14.1 billion of debt on its balance sheet. With the following deals, Charter’s debt will increase to $21.8 billion. According to some (such as Motley Fool), this means that Charter will have the “potential for robust earnings and cash flow growth due to bigger operating scale.”

Now, I understand the benefits of Charter’s moves. There are tax benefits, low interest rates (if they want to restructure later on, etc…) but with that said, why would anyone think the immediate future of Charter includes substantive capital improvements?

Last year, Charter CEO Tom Rutledge publicly admitted that their current TV service offerings simply weren’t very good. Therefore, Charter began to re-brand the company’s broadband and digital video services under the name “Spectrum.”

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Charter’s current service is and has been one of the worst ranked services in the country and the reviews for the branded service were average at best.

Charter was one of the first companies to add a “Broadcast TV Surcharge” to customers bills and continues to do so today. Charter was also the only company to have a $200 installation fee for customers wanting the 100 Mbps packages.