The Wall Street community reacted well to a report that Charter Communications (NASDAQ: CHTR) is in talks to buy Bright House Networks, with Charter's stock ending Thursday trading on the Nasdaq up nearly 6 percent.
Commentary has been sparse from either side since the exclusive Bloomberg report Thursday, which said Charter has been in talks for months with billionaire Si Newhouse Jr. to acquire the smaller MSO for an all-stock deal valued as high as $12 billion.
However, Bright House did release a statement, which seems to confirm the dialogue.
"Since the Time Warner Cable/Comcast transaction was announced, there has been some speculation regarding Bright House," Bright House said in a statement. "While we have had conversations with many parties about this transaction, we do not have an agreement with anyone regarding future plans for Bright House."
On Thursday afternoon, media analyst Craig Moffett released a note to investors lauding the Bright House asset but expressing uncertainty regarding Charter's end game.
"As an asset, Bright House Networks has much to recommend it," Moffet wrote. "It is the second largest privately held cable MSO (behind Cox Communications) with 2.1 million video subscribers and over 4 million homes passed, largely concentrated in the Tampa/Orlando corridor of Central Florida. The company has a reputation for being extremely well run, and it has--almost uniquely among cable MSOs--a strong reputation for service and customer satisfaction."
But Moffett also says that Charter and its principal backers at Liberty Media haven't been shy about their desire to consolidate and wonders whether this is a backup plan, in case the federal government goes ahead and approves Comcast's (NASDAQ: CMCSA) purchase of Charter's ultimate acquisition target, Time Warner Cable (NYSE: TWC). Or is Bright House part of the plan to end up with TWC?
"There are some who would argue that Charter would likely want to keep its powder dry in case they get the opportunity to buy all of Time Warner Cable," Moffett wrote. "On the other hand, and again relying on the Bloomberg article, if the deal is indeed all stock, then it would actually provide incremental dry powder (in the form of additional debt capacity) to make a subsequent run at TWC."
Bright House was created in 2002, carved out of disassembled assets belonging to AOL Time Warner. It was run by cable-industry veteran Bob Miron until 2010, when he retired and passed the torch to his son, Steve Miron, now CEO, and daughter Nomi Bergman, now president.
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