Charter Communications Inc. shares are up more than 10 percent Monday after The Wall Street Journal reported that John Malone and Liberty Media Corp. were closing in on a deal to snap up a 25 percent stake in Charter for about $2.5 billion.

Neither side has commented on the speculation, but it appears that Charter investors want to believe it. Charter shares were up $9.30 (10.3%) to $99.39 in midday trading Monday.

If the rumor is true, it would come right on the heels of Liberty Global Inc.'s proposed $23.3 billion acquisition of Virgin Media Inc. and would put Malone back in the domestic MSO business. He sold Tele-Communications Inc. to AT&T Inc. for roughly $48 billion in 1998. (In 2001, Comcast Corp. swooped in to buy what was then known as AT&T Broadband for $72 billion.) (See Liberty Makes $23.3B Play for Virgin Media.)

Having Malone and his deep pockets in Charter's corner could aid the MSO's growth strategy under new President and CEO Tom Rutledge. Although Rutledge sees Charter's underpenetrated cable properties as a growth opportunity, the MSO might also look to expand through a string of acquisitions.

If M&A opportunities do indeed become a core growth strategy for Charter, it's already got a start down that path via its pending $1.6 billion acquisition of the former Bresnan Communications systems from Rutledge's former company, Cablevision Systems Corp. (See Charter CEO Says Growth Is Path to Glory and Charter Plunks Down $16B for Optimum West.)

— Jeff Baumgartner, Site Editor, Light Reading Cable