After much speculation as to how Comcast (News - Alert) would attempt to divest 3+ million subscribers as a condition of its $45 billion merger of Time Warner Cable, Comcast and Charter Communications have agreed to a complex deal that would see Comcast divesting a net 3.9 million video customers, bringing its post-merger managed subscriber total to less than 30 percent of video subs in the U.S.

Charter would become the nation's second largest cable operator in the United States (up from No. 4 today), with 5.7 million video subscribers.

Under the deal, Comcast will divest 1.4 million customers in TWC systems directly to Charter for cash. And, Charter and Comcast will also each transfer approximately 1.6 million customers respectively in an asset swap that will affect Tier 1 markets like Los Angeles, where 280,000 homes will be transferred from Charter to Comcast. Also, a number of homes will be transferred from TWC to Charter.

"With regards to the swap, it was more efficient to utilize Time Warner (News - Alert) Cable systems with regards to the transfer," Comcast CFO Michael Angelakis explained on the Webcast explaining the arrangement.

In addition, Charter, through a tax free reorganization, will form a new holding company (New Charter) that will own 100 percent of Charter, and it will acquire an approximate 33 percent stake in a new publicly-traded cable provider to be spun-off by Comcast serving approximately 2.5 million customers, dubbed SpinCo. And, Charter will provide management services to the new company.

The principles are describing the elaborate plan as a streamlining of assets. The new service map will be "easier to operate and allow us to provide better high quality services at the local level," Charter president and CEO Tom Rutledge said in the webcast.

"The realignment of key cable markets achieved in these transactions will enable Comcast to fill in our footprint and deliver operational efficiencies and technology improvements," added Comcast chairman and CEO Brian Roberts.

Financial terms were not disclosed, but the Financial Times (News - Alert) put an estimate of $20 billion on the plan.