Charter Negotiates ‘in Good Faith’ to Save Bright House Deal

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Charter Communications Inc. said it is negotiating “in good faith” with Bright House Networks as the industry braces for another potential wave of consolidation.

Last month, Charter, the fourth-biggest cable operator, agreed to buy Bright House, the No. 6 in the industry, for $10.4 billion. That deal is now in jeopardy because it had depended on Comcast Corp. closing its merger with Time Warner Cable Inc. Comcast, the industry leader, dropped its $45.2 billion plan last week after concluding regulators would reject it.

Charter and Bright House, as part of their agreement, are required to renegotiate in good faith if the Comcast deal collapsed, Charter Chief Executive Officer Thomas Rutledge said during an earnings call Friday.

“And we’re doing that,” Rutledge said.

Charter’s accord with Bright House requires the companies to negotiate for 30 days after the Comcast-Time Warner Cable deal failed, according to a person with knowledge of the talks. During that time, Time Warner Cable can match any offer Charter makes for Bright House, the person said. Time Warner Cable has the right to block a Charter-Bright House deal because of Time Warner Cable’s longstanding arrangement to negotiate programming and other deals for Bright House, which has 2.5 million subscribers in markets such as Detroit, Indianapolis and the Tampa Bay area.

Charter reported a wider loss in the first quarter because of costs associated with financing a deal with Comcast. Charter had agreed to take control of 3.9 million Comcast cable-TV customers to ease approval of the Comcast-Time Warner Cable merger. Charter will no longer get those customers now.

First Quarter

The net loss was $81 million, or 73 cents a share, compared with a loss of $37 million, or 35 cents, a year earlier, Charter said Friday in a statement. Revenue rose 7.3 percent to $2.36 billion, driven by Internet subscriber growth, shy of the $2.37 billion average of analysts’ estimates compiled by Bloomberg.

Charter rose 0.2 percent to $187.44 at the close in New York trading. The shares have climbed 12 percent this year.

Another question now is whether Charter will try again to buy Time Warner Cable, the second-biggest U.S. cable company, after losing out to Comcast more than a year ago.

Charter advisers have reached out to Time Warner Cable to begin talks on an acquisition, people with knowledge of the matter have said. With Time Warner Cable shares now at about $156, Charter would need to pay a lot more than the $132.50-a-share that it offered in its failed attempt in January 2014. Analysts’ estimates for a bid range from $150 to $175.

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