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 / Updated  / Source: CNBC.com

The broadband battle heated up on Tuesday when Charter Communications said it agreed to buy Time Warner Cable for $55 billion, in a deal that would combine the second- and third-largest U.S. cable providers and create a more formidable rival to Comcast.

Charter will pay $195 a share for Time Warner in a cash and stock deal. The transaction will include a $2 billion breakup fee. Charter also announced it would acquire Bright House Networks, the sixth largest U.S. cable company, for $10.4 billion. The combined companies could have as many as 23 million total customers, just behind Comcast's 27.2 million customers.

The announcement comes a month after Comcast dropped plans to purchase Time Warner Cable for about $45 billion. (Comcast is the parent company of NBCUniversal.)

That deal faced challenges from the Federal Communication Commission, which was concerned that the combined companies would exercise too much control over broadband Internet networks.

CNBC's David Faber first reported news of the impending deal between Charter and Time Warner on Monday.

There has been a wave of consolidation in the cable industry. Providers are bleeding TV subscribers even as costs for TV, sports and movies rise and pressure from online video services such as Netflix and Hulu increases.

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— Tom DiChristopher, CNBC