Charter Communications, Inc. (CHTR) is a leading broadband communications company and the fourth-largest cable operator in the United States. The Company provides a full range of advanced broadband services, including advanced Charter TV video entertainment programming, Charter Internet access, and Charter Phone. Charter Business similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, business telephone, video and music entertainment services, and wireless backhaul. Its advertising sales and production services are sold under the Charter Media brand. Charter Communications, Inc. is headquartered in St. Louis, Missouri.

Time Warner Cable Inc. (TWC) is the second-largest cable operator in the U.S. and an industry leader in developing and launching innovative video, data and voice services. They deliver their services to customers over technologically-advanced, well-clustered cable systems that pass approximately 26 million homes.

Right on the heels of the recent mega-merger between Verizon and AOL, comes a new huge deal. The massive cable acquisition deal recently shot down down by the Feds-- the proposed merger of Comcast and Time Warner, will occur with a different parent firm after all. Media today is filled with the news that Charter Communications will acquire Time Warner Cable for $56.7 billion. This acquisition has been a long-term goal of Charter--which was making offers to Time Warner throughout 2013.

Charter is smaller than the targeted Time Warner, and the acquisition will instantly transform the company into one of the largest cable and internet providers in the US. The deal will make Charter second in the country, behind only Comcast. According to the New York Times, the deal "highlighted the need for cable and broadband companies to join forces as the industry experienced its latest round of consolidation."

Cable companies and broadband providers are scrambling to position themselves for the next wave of consumer preferences-- which are predicted to include "cord cutting" as they eliminate cable packages in exchange for services such as Netflix and Hulu. The "pipe" is important, and content is becoming secondary as consumers seek options to view content on demand, via mobile devices, etc.

Investors are to receive $195.71/share for their shares in Time Warner. This is a 14% premium above the stock's closing price Friday. The Time Warner Cable shareholders will receive an option to be paid $100 a share in cash and @$95 in Charter stock, or $115/share with the remainder in stock.

The new entity is to be known as "New Charter" and services will be available under the name "Spectrum." In addition, the company will continue with its planned purchase of Bright House Networks--a $10 billion deal that was announced in March.

Charter CEO Tom Rutledge--who will also become CEO of the new company, discussed the deal in a press release on Tuesday and noted that:

With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully–featured voice products, at highly competitive prices. In addition, we will drive greater competition through further deployment of new competitive facilities-based WiFi networks in public places, and the expansion of the facilities footprint of optical networks to serve the large, small and medium sized business services marketplace. New Charter will capitalize on technology to create and maintain a more effective and efficient service model. Put simply, the scale of New Charter, along with the combined talents we can bring to bear, position us to deliver a communications future that will unleash the full power of the two-way, interactive cable network.

Analysts note that this deal will also be required to pass muster with the Federal Government's FCC and Justice Department anti-trust division before it is finalized, but since Charter is smaller than the rejected Time Warner suitor Comcast, the deal will face less resistance from regulators. This company will not be as vertically integrated as that which would have resulted from the Comcast/Time Warner deal, because Charter and the other players do NOT possess the content production assets via a media division like Comcast did with NBCUniversal.

Prior to the announced acquisition, we had a HOLD recommendation on Time Warner Cable. Based on the information we gathered and our resulting research, we felt that Time Warner had the probability to ROUGHLY MATCH average market performance for the next year. The company exhibited ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.

Prior to the announced acquisition, we also had a HOLD recommendation on Charter Communications. Based on the information we had gathered and our resulting research, we felt that Charter Communications had the probability to ROUGHLY MATCH average market performance for the next year. The company exhibited ATTRACTIVE Sharpe Ratio but UNATTRACTIVE Book Market Ratio.

As is so often the case in these types of deals, shares of the target company increased in trading today, while shares in Charter decreased after the deal announcement.

Below is today's data on CHTR--the new parent company for TWC:

Valuation & Rankings
Valuation	42.70% overvalued	Valuation Rank	9
1-M Forecast Return	-0.45%	1-M Forecast Return Rank	19
12-M Return	26.89%	Momentum Rank	82
Sharpe Ratio	1.56	Sharpe Ratio Rank	99
5-Y Avg Annual Return	38.19%	5-Y Avg Annual Rtn Rank	97
Volatility	24.49%	Volatility Rank	70
Expected EPS Growth	248.25%	EPS Growth Rank	96
Market Cap (billions)	19.29	Size Rank	94
Trailing P/E Ratio	n/a	Trailing P/E Rank	25
Forward P/E Ratio	65.34	Forward P/E Ratio Rank	6
PEG Ratio	0.39	PEG Ratio Rank	69
Price/Sales	2.08	Price/Sales Rank	45
Market/Book	250.47	Market/Book Rank	1
Beta	0.78	Beta Rank	60
Alpha	0.24	Alpha Rank	89

Overvalued stocks now make up 65% of our stocks assigned a valuation and 27.47% of those equities are calculated to be overvalued by 20% or more. ALL sectors are calculated to be overvalued--with nine at or near double digits.