Charter Communications, the US cable TV group, has agreed to buy its rival Time Warner Cable (TWC) for $55bn, to create the second-biggest cable firm in the US behind Comcast. Charter is backed by John Malone, a Colorado billionaire known as the “cable cowboy” after he became involved in several big cable deals in the 1970s. His Liberty Broadband will own a fifth of the enlarged company.
What the commentators said
“Good things come to those who wait,” said Lex in the Financial Times. “And to those with deep pockets.” Charter first tried to buy TWC 16 months ago for $132.50 per share. Comcast trumped the bid, but when regulators scuttled that deal in April 2015, Charter was free to make another offer. This time it cost $196 a share. The cable cowboy has always been good at “playing the long game” in an industry that has been consolidating for 30 years, said Matthew Garrahan in the FT.
The package “is a classic Malone deal with a fiendishly complex structure aimed at delivering the maximum amount of influence and tax savings”. He has ended up with “de facto control” of the number two US high-speed broadband supplier, and the third-biggest provider of cable video services.
The deal signals a shift in the TV industry, said The New York Times. The dealmaking in the sector is due to companies struggling to keep up with how customers watch and pay for TV. As consumers have moved towards streaming videos online, via services such as Netflix, cable providers have sought greater scale to bolster their bargaining power with content providers.
There has also been plenty of action in Europe, noted the Daily Mail’s Alex Brummer. Malone’s Liberty Global has bought Virgin Media and Sky has hoovered up its German and Italian equivalents. Malone is keen on Vodafone’s assets and the new UK government may allow Fox to scoop up the 60% of Sky it has hitherto been prevented from buying. “There is no shortage of media empire builders.”