According to several reports, Charter Communications Inc. is close to announcing the acquisition of competing cable network Time Warner Cable Inc. for as much as $55 billion. Bloomberg was the first to report the talks, saying Charter is expected to pay about $195 a share for the company, or about 14% higher than Time Warner Cable’s recent closing price. TheFinancial Times and TheWall Street Journal have also reported that a deal is in the works, and could be announced as early as Tuesday.
This is Charter’s second run at Time Warner Cable. The fourth-largest U.S. cable operator tried to acquire its larger competitor last year, but Comcast made a better offer. That deal later expired due to fears of regulatory problems for Comcast if it went ahead with the acquisition. This time, Charter is going up against France’s Altice SA, which has also reportedly been in talks with TWC about a deal.
According to the WSJ, Time Warner Cable shareholders will be able to choose either $100 a share in cash and the rest in shares of Charter, or $115 in cash and the rest in Charter stock. The acquiring company will also take on about $22 billion in debt as part of the transaction and will wind up with about 15 million subscribers and 17 million Internet customers, making it the second-largest cable operator in the United States.
Cable providers in the U.S. have been hit by a series of competitive pressures, including a rise in “cord cutting” by younger TV watchers, many of whom have moved to streaming services offered by Netflix and Amazon. An acquisition of Time Warner Cable would be a coup for Charter’s largest backer, John Malone, who has been trying to secure the company’s position in the struggling industry for some time.
Charter has made multiple bids for Time Warner Cable but has been rebuffed each time. This time around, according to the WSJ, Malone got more involved in the bid, calling Time Warner Cable CEO Rob Marcus to say that he wanted it to be a friendly deal and convincing Charter not to submit a lowball offer.
Several of the news reports also claimed that an acquisition of Bright House, a smaller cable company that Charter has been trying to buy for several months, could be announced at the same time as the Time Warner Cable deal. The TWC takeover would have to be approved by U.S. broadcast regulators, but analysts said that it would likely not face the same kind of opposition as Comcast’s bid.