With Comcast expected to end its pursuit of Time Warner Cable, what’s next for the No. 2 cable operator Time Warner Cable?
“Charter remains on the hunt for deals, especially those that effectively improve [its] speculative grade balance sheet and utilize billions in net operating loss carry forwards it took out of bankruptcy. In March, Charter offered to buy Bright House Networks for $10.4 billion,in [a] mostly stock deal that would enhance its financial profile. While Charter said a deal was contingent on the close of the Comcast and Time Warner Cable merger, analysts believe it could swallow both Bright House and Time Warner Cable.”
Gara adds, “The $1.4 billion in pre-synergy EBITDA Bright House will bring to Charter could give the company $20 per share in additional cash to bid on Time Warner Cable, according Craig Moffett of MoffettNathanson. He believes that if Bright House remains interested in the Charter deal, and Time Warner Cable chooses not to make a counteroffer for Bright House, all three companies could eventually fall under the same roof.
“‘The reason Time Warner Cable is vulnerable is because Charter could use Time Warner Cable’s own balance sheet against it; buying Bright House Networks with stock would make them more vulnerable, not less,’ Moffett states.”
Before Charter went after Bright House, it had made a bid for Time Warner Cable (that then became moot when Time Warner Cable agreed to be acquired by Comcast for about $45 billion).
Cable veteran John Malone, the chairman of Liberty Media and Charter’s controlling shareholder, when asked back in November if he was still interested in Time Warner Cable if its deal with Comcast fell apart, answered quickly, “Hell, yes.”
If you have an interest in this story we highly recommend that you read all of Gara’s lengthy piece, which you can find if you click here.