Charter chairman John Malone has been throwing chum in the shark-filled investment waters the last few months, leading to a frenzy of gossip over cable industry consolidation that has been very profitable for investors. But for his part, Charter CEO Tom Rutledge this week stated
that while all the rumors make for a "rather frothy experience," Charter "doesn't need to do any acquisitions to be a successful company." "Time Warner [Cable] is relatively unique because it's not controlled by a family; and it's large; and they have a management transition going on," Liberty CEO Greg Maffei also stated, adding that "those factors have led to speculation about transactions."
Rumors of cable consolidation have been heated for much of the year, thanks largely to Charter board member John Malone and investors looking to cash in on the gossip-inflated stock gains. Said rumors exploded last week with a report claiming that both Comcast and Charter had contemplated a joint bid for Time Warner Cable
Rumors of Charter's never-ending interest in acquiring Time Warner Cable continue, with the Wall Street Journal
noting that Charter is polishing off financing agreements with banks in order to make a deal work. The Journal notes Charter has talked with Bank of America, Barclays and Deutsche Bank about a multi-billion dollar debt package that would underpin an offer for Time Warner Cable:
Charter has held talks with Bank of America Corp., Barclays PLC and Deutsche Bank AG about a multi-billion dollar debt package that would underpin an offer for Time Warner Cable, which has a market capitalization of nearly $35 billion, the people said. Another possible source of cash for a bid, according to people familiar with the matter: sovereign wealth funds and wealthy individuals. Arranging equity commitments from such parties could allow Charter to increase the cash component of the deal without taking on too much debt.
Earlier reports had suggested Charter wanted to accomplish a deal before the end of the year
, though reports have also suggested that Charter's hope appears to be that Time Warner Cable will be warmer to a deal once current CEO Glenn Britt leaves at the end of the year. Regardless, the biggest winners here continue to be Charter and Time Warner Cable investors who profit off of the stock surge every time another Charter-leaked rumor hits the press.
Rumors (most of them started by Charter Chairman John Malone and investors feeding off of the gossip) have been floating around for months that Charter is interested in acquiring Time Warner Cable. Time Warner Cable however remains somewhat luke warm to the idea. Speaking at the Morgan Stanley Technology, Media & Telecom Conference in Barcelona this week
, Time Warner Cable CFO Artie Minson stated that while Time Warner Cable is "always open to different conversations," about acquisitions, he said the company would be "very deliberate" about any such deals. "We want to make sure in any hypothetical transaction that it makes sense for our shareholders."
Less than a week after Charter CEO Tom Rutledge publicly admitted that their current TV service offerings are rather crappy
, Charter has announced plans for a brand refresh for the company's broadband and TV services. Like AT&T U-Verse, Verizon FiOS, Comcast Xfinity, and Cablevision Optimum, Charter has announced they'll be re-branding the company's broadband and digital video services under the name "Spectrum" in the hopes of changing public perceptions.
With all the quarterly earnings reports in, telecom analyst firm MoffettNathanson notes that the Pay TV industry lost about 113,000 subscribers on the quarter
. Cable operators lost 687,000 subscribers in Q3, and while telcoTV and satellite providers added 574,000 subscribers, it couldn't prevent the industry from seeing a net loss -- attributed to the slow and small but steady growth of cord cutters.
Charter's third quarter earnings
indicate that the cable operator's third-quarter net loss shrank to $70 million, down from $103 million one year earlier. Video losses also slowed, Charter losing 27,000 TV subscribers down from 71,000 last year.
New Charter chair and cable industry mainstay John Malone has been telling anyone who'll listen that the cable industry should consolidate
, leaking rumored acquisition talks to the press on a weekly basis; the speculation in turn helping to drive up cable industry stock. Malone's biggest goal continues to be a Charter acquisition of Time Warner Cable, despite a lack of interest by Time Warner Cable in being acquired.
Many cable operators have been very wary about implementing usage caps and per byte overages ever since Time Warner Cable's rather disastrous effort back in 2009
to force low caps and high overages on consumers. Since then, companies like Comcast and Time Warner Cable have spent their time "experimenting" with different options and caps as low as 5GB
-- while being cautious (so far) to ensure these options are voluntary for users.
CableLabs is expected to formally issue the specification for DOCSIS 3.1 sometime this month, according to comments made at the DOCSIS 3.1 engineering pre-conference symposium this morning in Atlanta. The new standard is expected to make cable broadband networks not only faster but more efficient, though consumers could have some time to wait before they begin to see the benefits in the real world. story continues..
You might recall that in 2011 Verizon struck a deal with the cable industry to not only obtain $3.6 billion in cable industry spectrum
, but to cross-market one-another's services, with cable ops not pushing Verizon Wireless as a bundle option. As part of that deal, Verizon and companies like Comcast also promised that they were cooking up "magical experiences
" that would involve video services that worked across both wireless and wired platforms.
With his new ownership of UK's Virgin Media and his new 27% stake in Charter Communications
, cable industry mainstay John Malone has sparked a new round of talk about consolidation in the cable industry
, consolidation that likely won't turn out particularly well for the consumer
. Malone (and people he's leaking information to) are busy telling anyone who'll listen that the remaining large cable operators should merge.
Rumblings continued to bubble forth this week
, with anonymous sources saying that Charter has had continuing talks with Time Warner Cable about an acquisition (Time Warner Cable is much more interested in acquiring than being acquired
), and that Charter has also had ongoing talks to acquire Cox Communications:
Cox Communications...has held talks about combining with rival Charter Communications Inc., according to two people with knowledge of the matter. Cox President Pat Esser has discussed a deal with representatives from Liberty Media Corp., which owns a 27 percent stake in Charter, said one of the people, who asked not to be named because the negotiations are private. The structure of a potential deal hasn't been determined, including which company might be the acquirer, the other person said.
Consumer advocates warn that while these cable companies don't directly compete, the combination of AT&T and Verizon's withdrawal from the fixed line market in huge swaths of the market, combined with fewer cable operators to buck the trend, means you'll likely see a harder push toward metered billing
by cable operators later this year and into 2014.
While most cable operators are now offering users the option to rent a DOCSIS 3.0 and Wi-Fi hotspot gateway, Charter Communications has launched a decidedly old-school option. The company this week announced
that they're offering users a customized "Charter high-performance Wi-Fi router" for the rock-bottom price of $40 down, $3 a month -- forever. The router in question (based on the Charter website
) appears to be the Netgear WNDR3800, which you'd be far better off buying online at any of several retailers for around $100
(actually there's better and cheaper routers to be had as well). "We’re confident this solution provides an optimal Wi-Fi experience to our customers," insists the company.
What John Malone wants, John Malone gets. The worldwide cable industry mogul made it very clear after he acquired a 27% stake in Charter that he wanted Charter to grow quickly, either through acquiring Time Warner Cable or Cox
In most areas cable has already won the broadband wars, with inexpensive DOCSIS 3.0 upgrades allowing them to offer speeds that cash-strapped, smaller telcos simply can't match. As I noted the other day
, things are looking even brighter for most cable operators given that AT&T and Verizon have all-but stopped next gen upgrades, and are willfully driving DSL customers they don't want to cable, strengthening cable's dominance across most of America over the next five to ten years.
The FTC has given their approval
for Charter's acquisition of Cablevision's "Optimum West" territories for $1.625 billion in cash. The 300,000 customers in Colorado, Montana, Wyoming and Utah have only just seen the paint dry on their last sale, from Bresnan Communications to Cablevision
for $1.37 billion just two years ago. Charter beat back companies like Suddenlink and Time Warner Cable who were also interested. "Optimum West is an ideal fit for Charter and we anticipate an efficient integration process," said Charter CEO Tom Rutledge. Rumors meanwhile have intensified that Cablevision may finally be sold
, with Time Warner Cable the most likely suitor.
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