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Charter buys Time Warner Cable to create America's second biggest cable provider

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Time Warner Cable valued at $78.7 billion

Charter Communications is buying Time Warner Cable (TWC) in a deal that values the latter, larger company at $78.7 billion. The two firms will merge together under the newly created parent company New Charter, which will become the second biggest cable provider in the US after Comcast. A separate acquisition by Charter of the smaller cable company Bright House Networks for $10.4 billion means that the new company will soon have 23.9 million customers in 41 states.

The merger will still have to be approved by regulators

This is the fourth time Charter has tried to acquire Time Warner Cable in the last three years, with this week's deal only made possible after Comcast abandoned its own $45 billion merger with TWC due to resistance from regulators. Charter's cash-and-stock deal — valuing Time Warner Cable at $195 a share — will still have to be approved by regulators, but according to reports from Bloomberg and The Wall Street Journal, FCC boss Tom Wheeler recently called the heads of both Charter and TWC to assure them that despite what happened with Comcast, there isn't an outright ban on such mergers.

In a statement released after the announcement of the deal, Wheeler said: "The FCC reviews every merger on its merits and determines whether it would be in the public interest. In applying the public interest test, an absence of harm is not sufficient. The Commission will look to see how American consumers would benefit if the deal were to be approved." Even if the deal is approved, Comcast will remain the biggest US cable provider with around 27 million customers.

The creation of New Charter comes at a time when cable companies are struggling to keep up with the changing habits of American TV viewers. The rise of streaming video and competition from tech-savvy companies like Netflix and Amazon has created a difficult market, and mergers such as this give cable companies greater leverage when bargaining with TV networks.

Update May 26th, 8:05AM ET: Updated to include statement from Tom Wheeler.