Advisers for Charter Communications Inc. have reached out to Time Warner Cable Inc. to begin friendly talks on an acquisition after Comcast Corp. withdrew its bid for the company, people with knowledge of the matter said.
Charter’s goal is to buy Time Warner Cable quickly, though executives from the companies haven’t spoken yet, the people said, asking not to be identified because the negotiations are private. Charter has approached banks about financing, one person said. Talks are at an early stage and haven’t yet addressed price or structure, and may not result in a deal, the people said.
Time Warner Cable’s already expressed concern that a combined company may be too indebted, one person said, though Charter’s planned acquisition of Bright House Networks LLC for $10.4 billion may help mitigate those concerns because it will give Charter more borrowing capacity.
Time Warner Cable jumped 5.5 percent to $157 as of 3:01 p.m. in New York, giving the company a market value of about $44 billion. Charter slipped 0.2 percent to $183.31.
Charter and its largest shareholder, Liberty Media Corp. have publicly stated their desire to acquire Time Warner Cable if Comcast’s deal fell through. When asked in November if Charter would attempt to buy Time Warner Cable if the Comcast deal failed, billionaire John Malone responded, “Hell yes.”
Comcast Friday withdrew its $45.2 billion offer -- valued at about $158.82 a share -- after regulatory pushback. Charter attempted to buy Time Warner Cable for $132.50 a share last January in a hostile bid.
Charter would like to get a friendly deal completed, according to one of the people. It would probably have to pay more than Comcast’s per-share offer to appease Time Warner Cable, the person said.
A Charter deal with Time Warner Cable could have an easier path with regulators. The combined company would have about 17 million broadband and 15 million video customers. Comcast’s deal with Time Warner Cable would have given the combined company about 30 million video customers. Bright House has 2.5 million subscribers that would go to Charter if that deal is completed.
A Charter-Time Warner Cable deal “wouldn’t have enough subscribers to attract that much regulatory scrutiny,” said Geetha Ranganathan, an analyst at Bloomberg Intelligence.
And while regulators may have been worried that Comcast’s ownership of NBCUniversal gave it too much power over TV programming and distribution, Charter would not raise the same concerns because it doesn’t own a TV network.
A spokesman for Charter declined to comment, as did a spokesman for Time Warner Cable.