Charter Communications Inc., the U.S. cable company that was outbid in an effort to buy Time Warner Cable Inc. last year, is in talks to acquire billionaire Si Newhouse Jr.’s Bright House Networks, people with knowledge of the matter said.
The discussions have been ongoing for months and both sides have agreed on the outline of a potential all-stock deal, two people said, asking not to be identified discussing private information.
Bright House, with about 2.5 million cable subscribers in states including Florida, California and Michigan, could be valued at about $12 billion if it fetches the same per-subscriber value that Charter last year agreed to pay in a deal with Comcast Corp.
Charter jumped 5.9 percent to $193.46 as of 4 p.m. in New York Thursday, giving the company a market value of about $22 billion. Closely held Bright House is owned by Newhouse’s Advance Publications Inc., which also controls Conde Nast Publications and the Golf Digest Cos.
A spokesman for Stamford, Connecticut-based Charter declined to comment on the talks. Lorelie Johnson, a spokeswoman for Bright House, didn’t respond to requests for comment.
The companies aren’t likely to announce any deal before regulators are able to rule on Comcast’s acquisition of Time Warner Cable said one of the people, and it’s possible that no formal agreement will be reached.
Time Warner Cable shares climbed as much as 2.8 percent on the news, suggesting investors think that Charter pursuing a transaction means the Comcast deal will get done.
While it’s been more than a year since Comcast agreed to buy Time Warner Cable for $45.2 billion, and regulators still haven’t approved the deal, new rules from the U.S. Federal Communications Commission on how to regulate high-speed Internet may make approval of the deal more likely.
The FCC’s push to guarantee everyone equal access to broadband may give regulators political cover to approve a deal while limiting Comcast’s broader power on the Internet. Cablevision Systems Corp. climbed as much as 2 percent.
Syracuse, New York-based Bright House, the sixth-largest U.S. cable company, would be a consolation prize for Charter after it missed out on Time Warner Cable last year. Charter made an unsolicited offer valuing Time Warner at about $61 billion, including debt, before the company agreed to sell itself to rival cable-operator Comcast.
Talks are complicated by who will control voting shares of Charter after an acquisition, said two of the people. Liberty Broadband Corp. owns about 26 percent of Charter and is looking to increase its influence over the company, said one of the people. A spokeswoman for Liberty didn’t return a call seeking comment.
Charter and Liberty have publicly stated their desire to grow through acquisitions. Charter “would likely pursue” Time Warner Cable if a Comcast merger fails, Greg Maffei, Liberty Broadband’s chief executive officer, said earlier this month.
Charter agreed last April to take control of 3.9 million cable-TV customers in a three-part deal with Comcast that’s meant to ease the approval process for the Comcast-Time Warner Cable deal.