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Billionaire Malone said to be exploring Time Warner Cable deal

By Alex Sherman and Serena Saitto
Bloomberg News

NEW YORK Billionaire John Malone is exploring scenarios for how Charter Communications Inc. could acquire Time Warner Cable Inc., even after his initial overtures were rebuffed, according to people familiar with the discussions.

Malone’s Liberty Media Corp., which owns 27 percent of Charter, is working on how to structure an offer with enough cash to win over Time Warner Cable investors, said the people, who asked not to be named because the deliberations are private. Time Warner Cable isn’t interested in a deal and doesn’t think Liberty and Charter can come up with an offer that’s attractive, according to people familiar with management’s thinking.

New York-based Time Warner Cable employs about 3,250 people in Charlotte across multiple facilities, including a large corporate campus off Arrowood Road, said a Time Warner Cable spokesman. In 2008, the company put its name on the uptown arena that’s home to the Charlotte Bobcats.

Acquiring Time Warner Cable would be a challenge for Charter, a much-smaller company whose debt exceeds its $12.5 billion market capitalization. Time Warner Cable, valued at $30.8 billion, also would demand a hefty premium, said Bryan Kraft, an analyst at Evercore Partners Inc. in New York.

“Charter would have much more to gain from a merger than Time Warner Cable,” Kraft said in a note to clients.

Liberty Media is considering options such as borrowing against its own balance sheet or Time Warner Cable’s assets to raise the cash needed for an offer, two people said. Comcast Corp. used a similar strategy to complete its purchase of NBC Universal from General Electric Co. in 2011.

Malone said this month at Liberty Media’s shareholder meeting that he saw Charter becoming “a horizontal acquisition machine.”

“The whole name of the game in the cable business is scale,” he said.

Despite the resistance of Time Warner Cable, the second-largest U.S. cable company, Liberty and Charter would like to get a friendly deal done in the coming months, one person said.

In addition, Charter is considering acquiring Cablevision Systems Corp., the fifth-largest provider, two other people said. Such a deal faces its own challenges because it would require support from the Dolan family, which has controlled the company for 40 years. Kelly McAndrew, a Cablevision spokeswoman, declined to comment.

A purchase of Time Warner Cable would probably include a premium of at least 20 percent, one of the people said, pushing a potential transaction to $37 billion or more. Charter ranks fourth in the cable industry, and even if one includes Liberty Media’s market value of $15.3 billion, the two businesses are smaller than Time Warner Cable.

Justin Venech, a spokesman for Time Warner Cable, declined to comment, as did Charter’s Alex Dudley. Heather Lipp, a Liberty Media spokeswoman, didn’t respond to a request for comment.

CNBC reported earlier this month that Time Warner Cable discussed merging with Charter, pushing up the stocks of both companies. Staff Writer Caitlin McCabe contributed.

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