Charter Communications said Tuesday it has agreed to a $55 billion acquisition of Time Warner Cable, creating a new giant in an industry racing to hook up homes to high-speed Internet as cable television declines.

The merger of the fourth- and second-largest cable providers will create a new contender in an industry long lacking competition and will face strong scrutiny from federal regulators who have complained of too much power in the hands of a few firms, particularly Comcast.

Charter will pay Time Warner Cable $195.71 a share, a significant premium over Time Warner Cable’s closing stock price Friday. The company also announced the purchase of small cable operator Bright House Networks, which will be combined with the two companies.

The merged company will serve 23.9 million cable, broadband Internet and phone customers in 41 states including in New York, Dallas, and Los Angeles.

The deal comes just one month after Comcast’s surprising decision to drop its own bid for Time Warner Cable, a deal regulators later said would harm consumers. Federal officials said the combination of Comcast and Time Warner Cable would put more than half of all U.S. broadband subscribers under the control of one company, giving it the potential to thwart competition from streaming services such as Netflix and YouTube.

Tom Wheeler, the chairman of the Federal Communications Commission, said Tuesday that the review of Charter’s deal will be viewed separately from the agency’s decision to challenge Comcast’s merger with Time Warner Cable.

“The FCC reviews every merger on its merits and determines whether it would be in the public interest,” he said. “The Commission will look to see how American consumers would benefit if the deal were to be approved.”

Regulators and even President Obama have expressed concern over the lack of competition in the broadband Internet industry. Just weeks ago Wheeler told an audience at the annual cable industry trade show that he was particularly concerned about a lack of competition among providers of the fastest Internet speeds for homes.

Comcast is the country’s biggest cable and broadband provider with a total 27 million customers.

Analysts say the merger between Charter and Time Warner Cable may ultimately be approved by regulators because it creates a strong competitor to Comcast. Regulators are also expected to approve AT&T’s merger with DirecTV, which will create a bigger video provider than Comcast.

Charter CEO Tom Rutledge said Tuesday in a release that the companies will be able to more quickly bring higher Internet speeds to homes through a merger.

“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,” Rutledge said.

If approved by federal regulators, the new company will be called New Charter and led by Rutledge. Charter said the deal is expected to close by the end of the year. The deal includes a $2 billion walk-away fee should Charter withdraw its bid.

Time Warner Cable shareholders will hold about 44 percent of the combined entity.

The merger completes a two-years pursuit led by Charter’s largest shareholder, billionaire cable and media titan John Malone, whose bid for Time Warner Cable in early 2014 was turned down. The deal Tuesday represents a 50 percent increase from Charter’s first bid.

Investors in Advance/Newhouse, the parent company of Bright House Networks, will hold about 14 percent of the new company. Liberty Broadband, which is owned by Malone, will hold a 20 percent stake in the new firm.

Charter and Time Warner cable do not compete against each other in the same regions. But combined, the firms are able to use their scale to strike better deals with programmers and more quickly invest in network improvements, analysts say.

“To be sure, there are clear advantages to this deal versus the prior deal with Comcast. Charter will gain genuine purchasing scale for programming, for example, something the Comcast deal would not have achieved,” said Craig Moffett, an analyst at Moffett Nathanson.

Moffett and other analysts said regulators will focus on whether the merger will foreclose competition in the streaming video market. The main concern for the Justice Department and FCC was that Comcast’s merger with Time Warner Cable gave the potential to harm that burgeoning market. Regulators will apply the same scrutiny to Charter’s deal, analysts say.

“To be sure, New Charter would still be significantly smaller than Comcast already is..but simply being smaller than Comcast may not be safe harbor,” Moffett said. “Yes, it is ‘probable.’ No, it isn’t a slam dunk.”