| June 28
June 28 Time Warner Cable would rather grow
through acquisitions than be bought by billionaire John Malone,
and has been eyeing Cablevision, its most coveted target, and
No. 3 cable operator Cox Cable, according to three people
familiar with Time Warner Cable's thinking.
Time Warner, the second-largest U.S. cable operator
with more than 12 million subscribers, has contacted both
companies in recent months to discuss options including a
merger, according to one of the people, although in neither case
have the talks progressed to any serious consideration of a
transaction. The source did not say how recent the talks were.
New York-based Cablevision, the No. 5 cable
operator, and Georgia-based Cox are controlled by
families that have so far shown no interest in selling,
according to the people familiar with the matter.
Cablevision's founding Dolan family controls 72.9 percent of
the company's stock, according to its proxy statement. Privately
held Cox Enterprises is also family-controlled.
Malone, whose Liberty Media owns a 27 percent stake
in cable operator Charter Communications, is working
out options to acquire Time Warner Cable, according to published
Time Warner Cable Chief Executive Glenn Britt is not
interested in a Charter merger, according to people with
knowledge of the matter.
Since cable pioneer Malone jumped backed into the U.S. cable
market with Liberty Media's investment in Charter earlier this
year, analysts have predicted a wave of cable consolidation. The
U.S. cable TV market is mature and faces rising programming
A fourth person familiar with Time Warner Cable's thinking
said that its executives believe a merger with Charter would not
benefit Time Warner Cable shareholders because of the large
amount of debt it would put on the combined company's balance
sheet. They are also skeptical about potential synergies.
The person, who asked not to be named because he was not
authorized to speak with the media, said Charter's purchase of
the company was a "far fetched notion" that would not appeal to
Time Warner Cable's shareholders.
Representatives for Time Warner Cable, Cox and Cablevision
declined to comment.
Time Warner Cable's management is more interested in being
an industry consolidator, the people say. Cablevision has 3.2
million densely clustered subscribers in the New York
metropolitan area, the company said in its most recent earnings
statement. That could fit well with Time Warner's New York
Cablevision also has a high-income subscriber base that is
viewed as attractive by rival cable companies.
Brean Murray analyst Todd Mitchell said that Cablevision and
Time Warner Cable have neighboring cable systems and because
their markets do not overlap, there would not be any regulatory
issues in a potential tie-up.
Cox, which has 4.5 million subscribers, is also attractive
to Time Warner Cable, because it has large holdings on the West
Coast, including in southern California, where both companies
have neighboring systems. Time Warner Cable has spent billions
of dollars on local sports rights for the Los Angeles Dodgers
baseball team and the Los Angeles Lakers basketball team, and it
could tap into Cox's markets with those channels, Mitchell said.
Cablevision, which the Dolan family unsuccessfully tried to
take private in 2007, has been grappling with increased
competition from rival Verizon FiOs in its main
footholds in Long Island, New Jersey and Connecticut, and is
losing video customers. Analysts say that Cablevision would now
be less likely to go private because of its high debt ratio and
lower cash flow.
Family patriarch Chuck Dolan, the founder and chairman of
Cablevision, who is 86, might be more in the selling mood than
he was been before, said one person familiar with the company.
"They don't want to be in it long term anymore," said the
Cablevision is a "good asset and would be of interest to
Time Warner Cable," as well as other companies, the person said.