Friday, November 22, 2013

Time Warner Cable May Have Charter and Comcast As Buyers

It seems that merger and acquisition news in the cable industry has suddenly turned more active with Charter gathering financing and Time Warner Cable reaching out to Comcast about a bid as well.  A Charter deal is seen as improving the cost efficiencies of running a cable distribution platform while a Time Warner Cable and Comcast deal is more about gaining a more national footprint.  The latter move also comes with a ton of anti-competition issues; "Comcast/TWC would control 60% of the cable homes in the country, 30% of all pay television households and 36% of all broadband connections in the U.S., which could pose a very high regulatory hurdle." As Comcast already gets some of the cheapest content license fee deals, being the largest provider, a larger size would have to find cost efficiencies from a more streamlined operational platform.

The Time Warner Cable deal with Charter might be even more exciting for the Charter CEO, Tom Rutledge.  It would be full circle for him as he not only demonstrated his leadership skills in running Cablevision but actually came from Time Warner Cable.  And running a combined TWC/Charter operation might help him get the next prize, Cablevision, and its Long Island operations.  I don't see Comcast making an offer and dealing with regulatory approval; they have their hands full as the largest MSO.  But I do think a Charter/Time Warner Cable merger as much more likely.