Comcast might get some huge competition

Media tycoon John Malone is reportedly mulling a takeover offer for Time Warner Cable or Cablevision.

By Jonathan Berr Jul 1, 2013 5:02PM
Liberty Media chairman John Malone on March 10, 2008 (© Rob Carr/AP)Comcast (CMCSA) Chief Executive Brian Roberts, whose father Ralph founded the Philadelphia company, is probably keeping a close eye on tycoon John Malone (pictured), the head of Liberty Media (LMCA).

According to reports in The New York Times and Bloomberg News, Malone is mulling whether his Charter Communications (CHTR) business will buy Time Warner Cable (TWC), the second-largest cable operator with more than 15 million customers. Such a move could have huge consequences.

By joining forces with Time Warner Cable, Malone is in a stronger position to fight efforts by content providers to increase fees that they charge TV companies to carry their programs. He also can push back against the ever-increasing fees media companies are paying for sports television rights.

Malone's plan, however, may be easier said than done.

The problem, according to reports, is that Time Warner Cable is skeptical about the benefits of such a merger and skeptical that Malone can offer a big enough premium to make such a deal worth their while. Bloomberg estimates that Time Warner Cable could fetch a price of at least $37 billion, a premium of at least 20% over its current valuation.

Another flaw in Malone's plan is size. Charter Communications' market value is about $1.5 billion, roughly three times smaller than Time Warner Cable's value of $32.7 billion. Wall Street is skeptical as well. Shares of Time Warner Cable closed down nearly 1.4% Monday to $110.95, and Charter closed down 1.3% to $122.22. Malone, though, may not be the type to take no for an answer.

"Liberty Media is considering options such as borrowing against its own balance sheet or Time Warner Cable’s assets to raise the cash needed for an offer," according to Bloomberg News, which notes that Comcast used that method to finance its acquisition of NBCUniversal. "Liberty and Charter would like to get a friendly deal done in the coming months."

Bloomberg also noted that Malone also is contemplating making an offer for Cablevision (CVC), the cable company controlled by the family of founder Charles Dolan. Shares of the Bethpage, N.Y., company surged more than 9% Monday to close at $18.44.

Look for Roberts to try and counter Malone's moves, no matter what they may be.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.


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7Comments
Jul 1, 2013 6:02PM
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We need diversification in cable not more consolidation.  The FCC caters to these conglomerates like the FTC caters to the big banks.  The only upside to this story is any threat to Comcast can't be a bad thing!

Jul 2, 2013 10:28AM
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"Charter Communications' market value is about $1.5 billion, roughly three times smaller than Time Warner Cable's value of $32.7 billion." That's the roughest "three times" ever! 
Jul 1, 2013 7:28PM
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we need something done to get the cost down. Comcast charges old customers out the butt but gives new custermers the same package for 1 quarter the price, after 22yrs you would think that you'ld be treated better, but I guess they think you will stay. how can dish give the same package for

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

434 a month that Comcast charges $115 and still make money. must be owned by the big oil.

Jul 1, 2013 6:35PM
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exactly KB.  we need competition and inovation, not consolodation into one giant media company.  and why haven't the Time Warner cable type people even tried to offer up their own version of a netflix?  or an al-la-cart style cable system? 

 

they are all stuck in their 1970's business model

Jul 1, 2013 7:19PM
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id like nothing more than to see comcast bankrupt! they are the most incompetent for profit abortion-of-a-company i have ever done business with
Jul 2, 2013 4:58PM
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But what will Comcast's share holders do when the stock goes down???
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