By Kate Tummarello - 04/28/14 01:28 PM EDT
Comcast is offering to shed 3.9 million subscribers in an attempt to make the company's proposed merger with Time Warner Cable more palatable to regulators.
The company on Monday announced a three-part deal with Charter Communications to shrink Comcast's user base if its proposed merger with Time Warner Cable is approved.
When Comcast announced the merger earlier this year, it pledged to divest some customers so that it would have less than 30 percent of the subscribers in the national cable market.
Under the deal between the three cable companies announced Monday, the merged Comcast would sell systems serving 1.4 million Time Warner Cable subscribers to Charter Communications.
The companies would also trade 1.6 million Time Warner Cable subscribers for 1.6 million Charter subscribers to improve "the geographic presence of both companies."
Comcast will also spin off 2.5 million subscribers into "a new, independent, publicly-traded company." Comcast and current Time Warner Cable shareholders will own two-thirds of the resulting company, and Charter Communications will own one-third.
Comcast "will have no role in managing" the spun-off company, which will be led by a nine-member Board of Directors including three Charter-appointed members.
Comcast CEO Brian Roberts said the three-part deal "follows through on our willingness to divest subscribers, while also marking an important step in our merger with Time Warner Cable."
The resulting "realignment of key cable markets ... will enable Comcast to fill in our footprint and deliver operational efficiencies and technology improvements," Roberts said in a statement.
Critics of the merger between Comcast and Time Warner Cable weren't swayed.
"This convoluted transaction may change the final tally of subscribers under the proposed merger, but it can't change the fact that this deal is a big loss for innovation and competition," Free Press Policy Director Matt Wood said in a statement.
Wood said that the DOJ and FCC "shouldn't be fooled" by Comcast's attempts to make its merger with Time Warner Cable more appealing.
"Transforming three giant companies into two behemoths gives no comfort to content providers or consumers," he said.