By Shalini Ramachandran
Charter Communications Inc. is laying the groundwork for a
potential bid for Time Warner Cable Inc., according to people
familiar with the matter, after Comcast Corp.'s deal unraveled
Friday.
Charter, which is backed by John Malone's Liberty Broadband,
could approach Time Warner Cable with a proposal soon, the people
said.
People close to Charter acknowledged that they will have to come
up with a better offer than what they presented to Time Warner
Cable more than a year ago, given that Time Warner Cable's
operations have improved and both companies' stock prices have
climbed. Charter is unlikely to make a hostile bid, one of the
people said.
Earlier on Friday, Comcast dropped its plan to acquire Time
Warner Cable for $45.2 billion amid resistance from regulators, a
stunning turnaround for one of the largest proposed media mergers
in years that would have united the nation's two largest cable
providers.
Time Warner Cable Chief Executive Rob Marcus said the company is
focused on operating its business in the wake of its merger breakup
with Comcast, and could emerge as either a buyer or seller amid an
expected industry consolidation. In an interview, Mr. Marcus
wouldn't comment on any possible deals Time Warner Cable might
pursue, but said the company has the flexibility to make necessary
moves.
"What I've said repeatedly is that we are in the business of
maximizing shareholder value, and we fully intend to fulfill that
obligation," Mr. Marcus said. "That could be achieved by running
the business on a stand-alone basis, allocating capital smartly,
managing our balance sheet or engaging in M&A as an acquirer or
as a seller."
Mr. Marcus declined to say what price Time Warner Cable would
ask for in any approach from Charter.
Charter had pursued Time Warner Cable before it was snapped up
by Comcast in a surprise move. The unraveling this week of the
Comcast deal also reverberated for Charter, scrambling two deals it
had planned. Comcast had a deal with Charter to sell or spin off
about 4 million subscribers that Comcast and Time Warner Cable
planned to divest in their combination. Plus, Charter had agreed
just last month to buy cable operator Bright House Networks LLC for
$10 billion. That transaction was contingent on the Comcast-Time
Warner Cable deal closing.
In January 2014, Charter had proposed a takeover of Time Warner
Cable at $132.50 a share in cash and stock. Time Warner Cable's
board rejected that offer, demanding $160 a share with at least
$100 of that in cash. Then Comcast swooped in with a cash-and-stock
deal that valued Time Warner Cable at about $158.82 when it was
announced.
Since the Comcast-Time Warner Cable merger was announced, the
value of Charter's stock has climbed more than 40%, giving the
company a stronger currency for deal-making. But Time Warner
Cable's shares have also climbed. Even with the Comcast deal
ending, Time Warner Cable was trading at about $152 Friday.
Time Warner Cable shares jumped on the report of Charter's
interest, rising about 5.4% to $156.74.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
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