| SUN VALLEY, Idaho, July 11
SUN VALLEY, Idaho, July 11 Liberty Media Corp
chairman and cable pioneer John Malone, whose offer to
buy Time Warner Cable Inc was rejected by its
management, sees Time Warner Cable as a buyer of other cable
operators in an industry that needs to be consolidated.
Cable companies need larger scale through consolidation,
whether through mergers or joint ventures, the so-called "King
of Cable" said in an interview on the sidelines of the annual
Allen and Co media conference in Sun Valley, Idaho.
Malone's Liberty Media, which has a 28 percent stake in
cable operator Charter Communications, has been
circling Time Warner Cable. Liberty also has a 1 percent
investment in Time Warner Cable.
"(Time Warner Cable) should be a consolidator because
they're the second biggest," he said.
Time Warner Cable, with roughly 12 million subscribers, is
the No. 2 U.S. cable provider behind Comcast, which has more
than 21 million video customers.
Since the 72-year-old Malone jumped back into the U.S.
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 faces rising programming costs as well as
technology threats from upstarts such as Netflix, which
offers movies and TV shows to subscribers online.
Malone recently made an offer for Time Warner Cable, which
was rejected by its management because they believe it is not
beneficial to shareholders, Reuters has reported.
When asked Thursday if he wants to buy Time Warner Cable, he
answered only "that's a tough question." While Malone indicated
Time Warner Cable could do its own deals, he left open the
scenario that Charter could still buy the company.
"Whether A merges with B, B buys A or A, B and C get
together to do a joint ventures to do things that have to be
done in larger scale, that's really the message I'm trying to
deliver," he said without specifying which companies those
Companies have to get bigger to thrive, he said.
Comcast is large enough to do OK. The rest of the industry
needs consolidation, in our view, in order to get scale
economics," Malone said.
In terms of the kind of deals Malone likes, he said that
geographically "buying the guy next door makes the most sense,"
referring to a decade-long push by larger companies to swap
local cable systems with one another to create larger clusters.
"Horizontal mergers are the safest, usually have the most
synergies and are the easiest, but a lot of that has already
been done in the industry. At this point you tend to look more
Time Warner Cable, which has long viewed Cablevision as an
acquisition target because it makes sense geographically in the
New York area, has reached out to smaller operators Cox and
Cablevision about creating larger clusters in some of
its main markets.
"Obviously if you find you could buy the guy next door,
that's the best but those opportunities are somewhat limited,"