Comcast eyes Time Warner Cable bid
Comcast, the $130bn market leader in the US cable industry, has waded into the battle to consolidate the country’s fragmented pay-television market, after being invited to examine a bid for Time Warner Cable. The group is weighing either making a solo “white knight” bid for Time Warner Cable, which has a market value of $38bn, or joining forces with Charter, its smaller rival that has been circling Time Warner Cable since the summer despite being far smaller, with a $14bn market capitalisation.
Comcast’s role in the process comes after representatives of Time Warner Cable approached the Philadelphia-based group to ask it to make an offer that would rival Charter’s overtures, said a person familiar with the matter. Comcast, which owns NBCUniversal, has been closely following the speculation around the sale of Time Warner Cable, but until Friday had not emerged as a potential suitor. Many analysts had assumed that its size could present serious regulatory obstacles to a successful acquisition of another US pay-TV and broadband provider, but a joint bid could allow it to overcome these obstacles by breaking up Time Warner Cable’s assets. People familiar with the situation cautioned that Comcast was not in active dialogue with either Time Warner Cable or Charter. Comcast and Time Warner Cable declined to comment. Charter, whose ambitions are supported by John Malone’s Liberty Media group, its largest shareholder, was not immediately available for comment. Craig Moffett, an analyst with MoffettNathanson, told clients that Tom Rutledge, Charter’s chief executive, had said last week that he saw consolidation as being about “running the companies better” rather than primarily about synergies. “There simply aren’t enough synergies [between Charter and Time Warner Cable] to support a reasonable valuation without ‘running it better’,” he added, “and even then, the resulting entity would be frightfully levered” (hence the appeal of a Comcast white knight scenario).
Speculation lifted share prices across the sector. Time Warner Cable shares, which started the year below $100, jumped 10 per cent to $132.92 on Friday, reaching their highest level since the company’s 2009 spin-off from Time Warner, owner of CNN, HBO and Warner Bros. Charter shares rose 6 per cent to $134.66 and Comcast rose 4.4 per cent to $49.52. Glenn Britt, who is due to hand over as Time Warner Cable’s chief executive to Rob Marcus at the end of the year, said in October it was “obviously absurd” to portray him as being opposed to consolidation. “Any decision on consolidation hinges on just one question, does it maximise value for our shareholders?” he said.