Charter Communications has renewed its interest in acquiring rival U.S. cableco Time Warner Cable (TWC) after Comcast’s $45.2 billion bid fell apart.
This is according to sources cited by The Wall Street Journal late last week, who claimed that Charter is preparing an offer and could soon make a proposal.
Charter made a bid for TWC in early 2014 that was rejected, prompting Charter – convinced it had the backing of shareholders – to propose replacing TWC’s board with representatives that would approve its offer. Before that idea could get off the ground, Comcast swept in with a higher offer that TWC duly accepted.
However, that deal unravelled last Friday in the face of overwhelming opposition in the form of the Department of Justice (DoJ), the Federal Communications Commission (FCC), and consumer lobbyists backed by over-the-top (OTT) service providers and content owners.
These groups were concerned that a merged Comcast-TWC would account for more than half of the fixed broadband and cable TV markets, endowing it with the means to give preferential treatment for content owned by its NBCUniversal arm, thwarting competition from smaller service providers and OTT players like Netflix and Amazon.
According to the WSJ’s sources, Charter is aware that it will have to improve on the offer it made last year in light of TWC’s improved performance. There also remain concerns over the amount of debt Charter would need to raise i n order to fund an acquisition. In addition, the sources assert that TWC believes Charter’s shares are overvalued, so it will be reticent about accepting a large amount of stock as part of a potential transaction.
