Midsized cable company Bright House Communications has emerged as a key pawn in the ongoing M&A dance between Charter Communications (NASDAQ: CHTR) and Time Warner Cable (NYSE: TWC).
According to the Wall Street Journal, top TWC executives have spoken with Bright House owner Advance Newhouse Communications about a possible acquisition of Bright House. Such a deal is viewed by cable industry analysts as a means of making it more difficult for Charter to, in turn, buy TWC, through either friendly or unfriendly means.
A Bright House purchase would raise TWC's debt levels, Moody's analyst Neil Begley told WSJ. "I wouldn't call it a poison pill, but it's a bigger pill to swallow," he said.
In late-March, Charter entered an agreement with the Newhouse family to buy Bright House for $10.4 billion. But a central clause of that agreement was that it would have to be renegotiated if Comcast's (NASDAQ: CMCSA) proposed $45.2 billion takeover of TWC was rejected by federal regulators, which it was.
As Charter President and CEO Tom Rutledge confirmed on Friday in his company's first-quarter earnings call, Charter indeed plans to resume talks with the Advance Newhouse.
The two sides have a 30-day "good faith" window in which they can renegotiate their deal. But TWC is allowed to talk to Bright House, too.
News of Bright House's emerging involvement in cable's major M&A activity comes as Rutledge is preparing to meet with TWC CEO Rob Marcus next week.
TWC is already listing "Charter related materials" on its investor-relations website.
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