By Drew FitzGerald and Patience Haggin

America's cable giants are being squeezed from all sides. Competition from wireless carriers is surging. Government subsidies are on hold. The onetime fortress of cable TV has all but crumbled.

Those forces propelled the $21.9 billion deal Charter Communications struck Friday to buy Cox Communications. It is a union of two big players steeped in family history trying to defend their core broadband business against intensifying pressure from cellphone carriers charging into their home turf.

A decade ago, broadband providers pursued big mergers to protect their ailing TV businesses. These days, the main concern is that broadband -- what had been the ultimate moat for these multibillion-dollar enterprises -- is under attack.

Cable internet service, once a reliable engine of high-octane growth that added millions of subscribers a year, is now a grind for the industry's two heavyweights, Charter and Comcast. Selling a broadband connection remains their main way to reap profits from the internet economy, from streaming to gaming, but that growth engine is sputtering.

Cellphone carriers like Verizon and T-Mobile have heightened the threat with home broadband service beamed over the air. Wireless companies have racked up millions of customers with the offerings, which use 5G technology to provide internet speeds that are competitive with fixed cable lines at lower prices.

The pressures of this new landscape have come into focus in recent months: Charter lost 60,000 internet customers in the March quarter, while rival Comcast reported an acceleration in broadband customer losses.

"We have AT&T, Verizon, T-Mobile in 100% of our footprint. We have satellite everywhere we operate," Charter chief Chris Winfrey said. "It's significant."

The deal with Cox gives the combined company more heft in competing for customers, negotiating with programmers and making network investments. It also expands the merged company's enterprise offerings.

It combines Charter's 31.4 million customers with Cox's 6.3 million customers. Charter shares rose nearly 2% Friday.

Cox, the longest continuous cable operator in the U.S., has customers in key growing markets like Phoenix, Las Vegas and parts of Southern California that would bolster Charter's footprint. The companies expect $500 million in annual cost savings within three years of the deal closing.

"You really do need scale in this business," said Andrew Cole, executive chairman of Glow Services, a telecom-focused software company, and board member of European cable company Liberty Global. Liberty Global, like Charter, is part of cable mogul John Malone's communications empire.

"The coming-together of cable in its entirety over time will happen because that's the only way they can compete against these giants, which are the telcos," Cole said.

Family-owned Cox Enterprises will hold about 23% of the combined company, which will take on Cox's about $12 billion in outstanding debt. Cox will effectively take Liberty's place as the source of long-term capital, Charter said Friday.

Within a year after the Charter-Cox deal closes, the combined company, which will be headquartered in Stamford, Conn., plans to change its name to Cox Communications. Spectrum will be the consumer-facing brand.

It's another big bet by Malone, who catapulted Charter nearly a decade ago from a small-time cable player into one of the nation's largest with the acquisition of Time Warner Cable. Then, his main problem was the future of TV. Now, the biggest challenge is the future of broadband.

Malone, who is moving into his 80s, has been working to cement his legacy over the past few years by simplifying his sprawling media and telecom holdings. Charter last year agreed to buy Malone's Liberty Broadband, its largest shareholder, to simplify its ownership structure. Charter executives on Friday said that move will close at the same time as the Cox transaction.

Charter's decision to adopt the Cox name shows that Malone is ready to pass the torch to a new partner, at least in cable.

Cox is a major player in the internet and pay-TV business, but is still dwarfed by Charter and Comcast. The Atlanta-based family business has opted to stay private for the past two decades as other cable and wireless companies swelled through ever-bigger acquisitions.

Adding to the near-term uncertainty for internet providers like Charter, the Trump administration put his predecessor's federal $42.5 billion broadband-construction program on hold. The U.S. Commerce Department has frozen grants to state authorities that were set to start awarding contracts this year while it reviews the program's criteria.

Streaming also continues to eat away at cable providers' video businesses.

These days, consumers are streaming Netflix, not watching MTV. Streamers, including some run by tech giants like Amazon and Apple, have further undermined cable's hold on video customers by venturing further into live sports that were long core to pay-TV bundles.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Patience Haggin at patience.haggin@wsj.com

(END) Dow Jones Newswires

May 16, 2025 17:28 ET (21:28 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.