Charter Communications could soon make a bid for Time Warner Cable (TWC) following its failure to merge with Comcast, the Wall Street Journal reported, citing people familiar with the matter. John Malone, a backer of Charter and part of Liberty Broadband believes further consolidation would be good for the US cable industry, helping companies deal with the stagnating pay TV business and prompting investments to capitalise on growth in broadband as streaming video takes off.
Joining Charter and TWC would create an entity with 15.6 million video subscribers and 16.4 million broadband customers, compared to 21.7 million and 20.7 million for Comcast.
However, TWC rejected a bid from Charter before accepting a Comcast offer last year, and many of the company’s concerns about a potential combination remain, a source said. TWC is worried about the level of debt the combined company would have, since Charter would likely raise a large amount to finance a deal, the person said. TWC also believes Charter’s shares are overvalued. A Charter offer with a high proportion of cash in the mix would be better received by TWC, the source said.
Indeed, TWC believes it is in position to be an acquirer, though Charter might not be its target, because its stock is viewed as expensive, the person said.
