Charter Communications to bid again for Time Warner Cable

19 Jul 2013

US cable operator Charter Communications Inc is working with Goldman Sachs for tabling a bid for Time Warner Cable Inc, the second time this year it is pursuing the second largest cable company in the US.

Charter, backed by John Malone, the billionaire who runs Liberty Media Corp, is preparing once again to bid for Time Warner Cable after being rebuffed in May for not having offered a premium, Bloomberg today reported, citing people with knowledge of the situation.

Malone, who had in March acquired a 27 per cent stake in Charter, is scouting potential acquisitions in order to turn the Connecticut-based cable company into ''a horizontal acquisition machine,'' the report said.

But Malone will have to convince Charter's shareholders since the company will have to take on massive debts to buy Time Warner Cable.

Charter has a market value of $12.6 billion, while Time Warner Cable has a market cap of $33.1 billion.

Saddled with debt of around $22 billion, Charter had filed for Chapter 11 bankruptcy protection in March 2009, and emerged from it in November 2009.

The Nasdaq-listed company provides advanced video, high-speed internet, and telephone services to about 5.2 million residential and business customers in 25 US states.

It acquired Cablevision System Corp's western cable asset Optimum West in February for $1.63 billion.

With more than 15 million customers, Time Warner Cable offers data, video, and voice services to businesses of all sizes, cell tower backhaul services to wireless carriers and, through its NaviSite subsidiary, enterprise-class hosting, managed application, messaging and cloud services.

It posted net income of $2.2 billion in 2012 on revenues of $21.4 billion.

It carried out its biggest acquisition in 2011 when it purchased Insight Communications Co from private equity firm Carlyle Group, for $3 billion, in order to expand into three Midwest states - Kentucky, Indiana and Ohio.

Colorado-based Liberty Media owns interests in a broad range of media, communications and entertainment businesses. Its subsidiaries include premium home entertainment provider Starz, Atlanta National League Baseball Club, and location service provider True Positon.

The company also has stakes in satellite radio service provider SiriusXM Radio Inc, concert firm Live Nation Entertainment Inc, book retailer Barnes & Noble Inc as well as minority interests in media and entertainment giants Time Warner Inc and Viacom.

Over the last few years, Malone, who made his fortune by selling the company he founded Tele-Communications to AT&T for $48 billion in 1998, has restructured his media empire into several smaller businesses, to improve efficiency and obtain tax benefits.

In November 2011, Liberty Media spun off its video and online commerce businesses, including QVC, Backcountry.com and Bodybuilding.com, to form Liberty Interactive and last year spun off its premium cable business Starz LLC to a separately traded company.

The Starz spin-off left Liberty Media with about $1.8 billion in cash and debt-free, giving it a free hand to make large acquisitions.