Rumor mill: Charter may be eyeing Time Warner Cable as an acquisition target

Charter Communications (Nasdaq: CHTR), which is partially owned by Liberty Media (Nasdaq: LBTYA), has been in talks with Time Warner Cable (NYSE: TWC), about a possible merger; however, the likelihood of that deal coming to fruition is weak. According to a report by CNBC on Friday, Time Warner Cable CEO Glenn Britt talked with Liberty Media Corp. CEO Greg Maffei about a possible acquisition by Charter. Liberty owns 27 percent of Charter..

Although both Time Warner Cable and Charter's stocks surged at close on Friday because of the report, analysts say that neither company is likely to pursue the deal.  TWC's stock climbed 8.1 percent to $103.93 at close, its biggest one-day gain since April 2009 and Charter gained 5.2 percent to $116.61.

Nevertheless, the fact that the two companies talked about a potential merger signals to investors that consolidation in the cable industry is a strong possibility.  Consolidation has been a recurring theme among the nation's top cable MSOs, particularly has programming costs continue to rise and competition from over-the-top players is making it difficult to retain and attract subscribers.

In fact, Comcast  (Nasdaq: CMCSA) co-founder and former vice chairman Julian Brodsky told FierceCable last week at The Cable Show in Washington, D.C., that he believes there will soon be another wave of consolidation in the industry and he specifically pointed to Charter. "I think there is another wave of it, the most significant thing being Liberty [Media]'s investment in Charter, which I think is a significant event," Brodsky said.

In March Liberty Media announced it was buying a 27 percent stake in Charter for $2.4 billion.

For more:
-See this CNBC story
- See this Bloomberg article
- See this Barron's report

Related articles:
Comcast co-founder Brodsky predicts more consolidation
Liberty Global closes Virgin deal, becoming world's biggest cable operator
Virgin Media stock jumps 17 percent after it c.onfirms talks with Malone's Liberty Global
Liberty Media to pay $2.62 billion for 27.3% stake in Charter Communications

Update: This story was corrected to note that Liberty owns 27 percent of Charter, not Time Warner as was initially written.