Are Cox and Charter, the Nation’s 3rd- and 4th-Largest MSOs, Talking Merger?

Aug 5, 2013  •  Post A Comment

"Cox Communications Inc., the third-largest U.S. cable provider, has held talks about combining with Charter Communications Inc. [the fourth-largest U.S. cable provider], according to two people with knowledge of the matter," writes Alex Sherman on the website of Bloomberg.com.

The story continues, "Cox President Pat Esser has discussed a deal with representatives from Liberty Media Corp., which owns a 27 percent stake in Charter, said one of the people, who asked not to be identified because the negotiations are private. The structure of a potential deal hasn’t been determined, including which company might be the acquirer, the other person said. Cox and Charter also haven’t begun direct talks, the people said."

However, after the Bloomberg story appeared, The Atlanta Journal-Constitution ran a story that said, "[I]n an internal memo to employees, Cox Communications President Pat Esser dismissed the news report and said he had not met with representatives of Charter or major shareholder Liberty Media to discuss a merger.

“’While our standard policy is to not comment in the press on rumors related to mergers and acquisitions, the media continues to persist with these rumors and I felt it important to let you know that they are just that — rumors and speculation,’ Esser wrote."

In its story Bloomberg noted: "Cox has 4.8 million video subscribers, while Charter has 4.4 million, according to Craig Moffett, an analyst at Moffett Research LLC in New York. ‘A Cox deal, if available, makes a ton of sense for Charter,’ Moffett said … in a research note. ‘Nosebleed leverage wouldn’t be necessary; a merger of equals would leave balance sheet room for subsequent deals, while still giving Charter the benefit of a doubling of scale.’"

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