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Uncertainty With TWC-Charter Merger Continues

19 Jun, 2013 By: Doug McPherson

NEW YORK – Rumors on Friday about a possible Time Warner Cable/Charter Communications merger had cooled some by Monday.

CNBC reported that Liberty Media, which owns a 27-percent stake in Charter Communications (and its 5.2 million subscribers), was pushing for the deal and approached Time Warner Cable, which has 15 million subscribers, about a possible merger. Early last week, Bloomberg News said Liberty had it sights set on Time Warner Cable.

CNBC also said Time Warner Cable showed no interest in a deal. Still, stock of both Time Warner Cable and Charter was up last Friday – Time Warner by 8 percent and Charter by 5 percent. On Monday, stock prices of both companies were less active – Time Warner was down 2.3 percent to $101.52 in mid-day trading; Charter was up 0.8 percent to $117.57.

Time Warner is the second-largest U.S. cable operator and Charter the fourth.

Bloomberg News reports the idea of using mergers to help combat escalating programming costs was a topic of conversation at an industry conference last week, said Amy Yong, an analyst at Macquarie in New York.

“Coming out of the Cable Show, the theme was industry consolidation,” Yong, who has the equivalent of a buy rating on Time Warner Cable, said in an interview. The prospect of mergers and acquisitions is “important for this sector,” she said.

Liberty Media, controlled by billionaire John Malone, announced it was buying a 27-percent stake in Charter in March. Malone said earlier this month he wanted Charter to be “a horizontal acquisition machine” and was interested in both smaller and larger U.S. cable deals.

Malone has rolled up cable companies before. He built Tele-Communications Inc. into one of the largest pay-TV companies in the 1970s and 1980s, before selling it in 1999.

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