Even as Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) executives put on a united front defending Comcast's $45.2 billion takeover of TWC, Charter Communications (NASDAQ: CHTR), a spurned suitor for the nation's second biggest MSO, is mulling a bidding war.
A Bloomberg report, citing people with knowledge of the matter, said that Charter has not overcome the sting of being rejected in favor of Comcast and could rise up to again compete with Comcast. Adding to the intrigue, and creating a slight opening for Charter, is the fact that Comcast's stock price has declined since the merger was announced, reflecting market concern about the deal.
The St. Louis-based Charter could raise its bid for TWC, but if it loses, it may not even get the consolation prize of 3 million subscribers Comcast has pledged to divest if its deal goes through. Those subscribers would, at least in part, satisfy subscriber growth targets set by Charter's biggest investor, John Malone's Liberty Media.
Comcast has said it would sell the 3 million subscribers, probably for $18 billion. Other MSOs have expressed interest, and there was at least one report that a group of exiled Time Warner Cable execs would take the subs and start a new company.
Charter has already ruffled some features at both Comcast and Time Warner by publicly urging TWC investors to reject the Comcast bid.
"Charter is probably still getting under Comcast's skin by continuing their proxy effort," Wunderlich securities analyst Matthew Harrigan said in the story.
Comcast has certainly gotten under Charter's skin. Charter had started the bidding for Time Warner Cable for $37 billion with Comcast as a potential partner. The Philadelphia MSO then topped that bid and left Charter in the cold.
It is, for all intents and purposes, becoming more personal than just business.
"It's a real game theory situation that's tough to address," Harrigan said. "Comcast probably doesn't want to go higher on the price for Time Warner Cable. You have to be careful about cable valuations in this environment. But that affects Charter too. So I think Charter's in a bit of a box."
Spokesmen for both Comcast and Charter declined to comment on the Bloomberg story.
- see this Bloomberg story
Charter pushes TWC investors to reject Comcast offer
Time Warner Cable exiles could run new cable company formed by Comcast sub spinoff
Maffei: Liberty would eye options if Comcast fails to close TWC deal
Charter CEO downplays impact of Comcast-TWC merger on programming expenses
Confirmed: Comcast agrees to acquire Time Warner Cable for $45.2B