Time Warner Cable Rejects Malone’s $62 Billion Charter Buyout Bid

Time Warner Cable, the nation's second largest cable company, is holding out for $160 per share

  • Share
  • Read Later
Mike Blake / Reuters

How about $62.35 billion?

Not enough, according to Rob Marcus, CEO of Time Warner Cable, the nation’s second largest cable company. That’s how much money Time Warner Cable turned down on Monday as it rejected a blockbuster buyout offer from Charter Communications, a smaller cable rival. Marcus said Charter’s current proposal is a “non-starter,” because Time Warner Cable is worth much more than that.

By the end of the year, Time Warner Cable could be controlled by John Malone’s Liberty Media group depending on the outcome of the fight. Malone, the legendary cable industry pioneer, is the largest Charter shareholder, with about 27% of the company’s shares. Malone is using Charter to regain a foothold in the U.S. telecom market. If past history is any guide, the man once dubbed the “cable cowboy” won’t stop until he gets what he wants.

With U.S. stock markets reaching record levels, U.S. mergers and acquisitions are in full force. The latest tech acquisitions are dwarfed by the consolidation taking place in the U.S. telecom infrastructure space. Still, the Silicon Valley tech press loves mergers and acquisitions. That’s why more than two-dozen tech blogs covered Facebook’s $15 million acquisition of Branch. Big deal, right? A few hours later, Google made that deal look like chump change by announcing a pact to buy smart-home device company Nest for $3.2 billion. That amounts to about 5% of Google’s cash on hand. No problem. Google will pay that off next quarter.

(MOREWhat the Aereo Supreme Court Case Means for the Future of TV)

Time Warner Cable immediately refused Charter’s latest proposal as a non-starter, said Time Warner Cable CEO Rob Marcus, who added that Time Warner Cable is willing to sell, but the price must be substantially higher than the $132.50 that Charter has proposed. “TWC is a one-of-a-kind company,” Marcus said. Time Warner Cable says it would agree to be acquired for $160 per share or about $75 billion including debt. This deal was long expected. $15 million? $3.2 billion? Try $75 billion. That’s a deal.

“We are the only large pure-play, non-family controlled cable operator in the United States, with 15 million customers in some of the country’s best markets,” said Marcus. “We have an incredibly robust network, having invested almost $15 billion in CapEx since our separation from Time Warner Inc. in 2009.” (TIME parent Time Warner spun off Time Warner Cable in 2009.)

If the deal happens, it will represent a triumphant return to the U.S. telecom market by billionaire mogul and cable industry pioneer Malone, whose Liberty Media group owns a 27% stake in Charter. Malone is a legendary figure in U.S. telecom and media markets. More than a decade ago, Malone made a fortune by leading efforts to consolidate the cable industry. If Malone can use Charter to buy Time Warner Cable, he will have pulled off an impressive cable industry comeback.