Charter plots renewed bid for TWC in wake of Comcast kibosh

27 Apr 2015

Charter Communications is laying the groundwork for a potential bid for New York-based Time Warner Cable (TWC), people familiar with the matter informed the Wall Street Journal (WSJ), after Comcast’s USD45.2 billion deal to buy the company unravelled last week. On Friday Comcast and TWC formally announced they had dropped plans for a ‘mega-merger’ that would have united the nation’s two largest cable companies, after running into regulatory red-tape. A brief statement from Comcast chairman and CEO Brian L Roberts noted: ‘Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away.’

As previously reported by TeleGeography’s CommsUpdate, TWC rejected a ‘grossly inadequate’ USD37.3 billion bid from Charter before accepting Comcast’s superior offer in February last year. According to the WSJ’s sources, many of the cableco’s concerns about a potential combination remain in place, with TWC particularly worried about the level of debt the combined company would have, since Charter would likely raise a large amount to finance a deal. Further, TWC believes Charter’s shares are overvalued, and will be hesitant to accept a large amount of stock in any transaction. A Charter offer with a high proportion of cash in the mix would be better received by TWC, the sources suggested.

Meanwhile, the ripple effect caused by the failure of the Comcast-TWC deal may yet impact on the future of Bright House Networks, with Charter’s USD10.4 billion takeover of the regional cableco contingent on the completion of the larger merger. No official word has emerged regarding the Bright House deal, but a number of US press reports have suggested that TWC could now make a play for Bright House. The expiration of TWC’s right of first offer for Bright House was included among a number of conditions.