Jeff Swiatek

jeff.swiatek@indystar.com

Indiana would become the largest service territory for a new publicly traded cable television company in the latest big change affecting TV viewers, as land-line, satellite and Internet-based companies fight for access to American living rooms.

As part of its proposed $45 billion purchase of Time Warner Cable, Philadelphia-based Comcast will divest most of its Indiana customer base and other Midwestern operations to make its merger acceptable to federal antitrust regulators.

Comcast, a longtime cable provider in Indianapolis and other Indiana cities, including Muncie and Bloomington, outlined a plan Monday that would shift several hundred thousand Indiana households to a newly created company by early 2015 if the merger deal is approved.

The new company would be managed by Connecticut-based Charter Communications, which also would acquire 1.4 million Time Warner subscribers, including thousands in Southern and western Indiana, as part of the three-company deal.

Some stock analysts expect Charter eventually would buy the new cable company, in which it would have a 33 percent stake at the outset. Charter also would transfer about 1.6 million of its customers to Comcast as part of the deal.

Comcast spokesman John Demming said it's too early to discuss how customer services would change in a switch to the new, not-yet-named company. A new company could change pricing or the way it packages channel offerings.

"It's premature. That will happen months away. That is all to be determined following the completion of the merger. And that'll all be determined by Charter."

Another Comcast spokesman, Brian Farley, said the new company is expected to extend most of the same products and services as Comcast offers, including high-speed data, video on demand, phone and business services.

A Charter spokesman didn't return a call for comment.

The result of the customer swapping will be to focus Charter's customer base in the Midwest and turn it into the nation's second-largest cable provider, with 5.7 million subscribers, compared with 4.4 million now.

The spinoff company would start out with 2.5 million customers, all currently with Comcast. Besides the Indianapolis area, larger cities with customers moving to the new company would be Detroit and Minneapolis-St. Paul.

Large parts of Indianapolis aren't affected by the deal because they're in cable TV service territory covered by Bright House Networks. The only major metro area in Indiana that Comcast won't relinquish is South Bend.

Most of Comcast's 2,100 Indiana employees would move to the new company, Farley said.

The effect of the Comcast deal on Indianapolis TV stations is unclear. Station executives said they're studying it, particularly what might happen to so-called retransmission fees.

Network TV stations derive about 10 percent of their revenues from retransmission fees paid by cable companies. Those fees have been growing in recent years and are expected to more than double by 2019, as cable companies and others that retransmit their programming pay more to get it.

"The big issue for us is retransmission rates. It's an important revenue source for us," said Carolyn Micheli, a spokeswoman for Cincinnati-based E.W. Scripps Cos., which owns WRTV-6 in Indianapolis and three other stations in cities where Comcast would sell its subscriber base after the Time Warner purchase.

The new company being created by Comcast enters a competitive industry in which cable operators are fighting satellite TV companies and even old landline phone companies such as AT&T to provide TV services. More customers also are getting their daily dose of movies, sitcoms, reality shows, televised sports and news off the Internet.

"We're trying to understand what this means," said Larry Delia, president and general manager of WTHR-13. "We'll just sit back and watch what happens. It's probably not going to be a big deal in the end."

Comcast came up with the three-way deal after thwarting an earlier bid by Charter to buy Time Warner.

"Despite what may be some lingering bad blood between Comcast and Charter, this deal illustrates that these companies can work well together to efficiently consolidate the cable TV industry," said Paul Sweeney, an analyst for Bloomberg Industries.

Call Star reporter Jeff Swiatek at (317) 444-6483. Follow him on Twitter: @JeffSwiatek.