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Charter Seeks to Replace TWC Board

Alan Breznick

Raising the stakes in its takeover bid for Time Warner Cable, Charter Communications has proposed a full slate of new directors for the TWC board. But TW Cable's management has once again rejected the move.

Charter Communications Inc. , which has been pressing Time Warner Cable Inc. (NYSE: TWC) to engage in serious merger negotiations for months, unveiled its 13 nominees to replace the entire TWC board in a press release Tuesday morning. Although the TW Cable annual meeting will not be held until later this year, Charter faced a Feb. 15 deadline to nominate new directors to the TWC board.

Most notably, Charter's lineup of 13 nominees includes TW Cable's former CTO Jim Chiddix and Charter's own former CTO Marwan Fawaz. Two other prominent, long-time cable executives on the list are former Virgin Media Inc. (Nasdaq: VMED) CFO Eamon O'Hare and former Cablecom CEO Bruno Claude.

In the press release, Charter CEO Tom Rutledge made it clear that his company is proposing the slate to bring TW Cable's management to the negotiating table:

    It is clear from our meetings with Time Warner Cable shareholders that there is an overwhelming desire to combine these two companies to increase Time Warner Cable's competitiveness, grow market share, and create shareholder value. Our purpose in this proxy contest is to enable shareholders of TWC to raise their voice and to provide a very capable board who will hear them.

But, just as it has repeatedly done before, TW Cable's management quickly dismissed the latest Charter ploy. TWC CEO Rob Marcus said in his own prepared statement:

    It is clear that Charter is nominating a slate of directors for the sole purpose of pressuring our Board into accepting the same lowball offer that it previously considered and unanimously rejected. Our board remains focused on maximizing shareholder value. We are confident in our strategic plan, which was detailed publicly on January 30, and we are not going to let Charter steal the company. (See TW Cable Strikes Back.)

In another notable gambit in the escalating proxy war between the second and fourth biggest US MSOs, Charter proposed that the size of TWC's board be fixed at its current 13 members. In addition, Charter wants TWC shareholders to "repeal any amendments to the bylaws that were adopted" by the TWC board without shareholder approval after July 26, 2012, the date of the last public amendment to the TWC bylaws.

Although some investors and industry analysts had thought that Charter might again raise the price of its takeover bid to woo TWC shareholders, the company made no move to do so on Tuesday. Instead, Charter is apparently standing pat on its third and latest offer of $132.50 per share in cash and Charter stock. TWC officials have said they won't accept anything less than $160 per share for their company's stock. (See Charter's $61.3B Bid for TWC Rebuffed Again.)

Charter also made no mention of its reported negotiations with Comcast Corp. (Nasdaq: CMCSA, CMCSK) to split the TW Cable's spoils if Charter's hostile takeover attempt succeeds. Under that proposed pact, Comcast would receive TWC's New York City, New England, and North Carolina cable system clusters in exchange for up to $16 billion in cash. (See Comcast May Join Charter Team.)

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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User Rank: Light Beer
2/28/2014 | 8:59:41 PM
Re: Great idea!
I honestly don't think it's a good thing for the consumer. I recently moved to Queens & got TWC. In the 6 months I've had their service, the prices have been boosted 3 times.

They claim their infrastructure needs updating & the TV networks are charging them more.

If I had a real alternative, I would've switched by the 2nd increase.
User Rank: Blogger
2/28/2014 | 5:02:03 PM
Re: Great idea!
So now we're going to see the top 2 cable cvompanies merge instead. Think that's better or worse than TWC and Charter getting together? I'm reallly not sure either way.
User Rank: Light Sabre
2/12/2014 | 5:10:23 PM
Money Talks
Charter's offer isn't much above where Time Warner's stock was when the first inklings of a potential offer started hitting various news organizations. While Time might ultimately take less than the $160 a share it has set as its limit, Charter's offer is far too low at this juncture for Time Warner to really consider it.

That could change if the market crashes or if Time's Warner's next earnings show a bigger than expected loss. But even without rival bids, Charter will likely have to sweeten the pot quite a bit for the deal to happen -- and that's if the Justice Department agrees to it.
User Rank: Light Sabre
2/12/2014 | 3:41:14 PM
Getting persnickety
The rhetoric going back and forth in this deal entertains me to no end. Charter is much smaller and the deal will be highly leveraged, funded primarily with debt, and it's still recovering from its bankruptcy past, and yet it's swinging the big verbal guns when it comes to characterizing TWC's overall health. It's all "failed operational strategy" this and "TWC is in need of a transformational event" that, even though the Q4 financials weren't that bad. OK, subscriber drain on the video side was horrendous, but overall--it's not looking like a consumption victim in Victorian England just quite yet. And as your own Dan O'Shea pointed out, when it comes to broadband, which is really the future, it's got some assets to talk about.

At the same time, I'm rooting for Charter-mostly because I really don't want to see Comcast--which TWC has been in talks with as well--get any bigger. 

And, the idea of hijacking the board is so 1980s corporate raider awesome on some levels. We'll see if shareholders take the bait. 

There's always the middle path too, where Charter and Comcast split TWC's baubles...


User Rank: Light Beer
2/11/2014 | 10:53:05 PM
Re: Great idea!
I agree. Especially in major metropolitan areas where you get squeezed into only 1 or 2 choices because of zoning.
Mitch Wagner
Mitch Wagner,
User Rank: Lightning
2/11/2014 | 6:59:29 PM
Great idea!
"I'd love it if a couple of the cable companies merged. There needs to be less choice for cable and Internet service," said nobody never.
User Rank: Light Sabre
2/11/2014 | 5:26:28 PM
Patty cake
I kind of wish that we could fast forward through this patty cake mating dance and just get a deal done. I assume Time Warner Cable will bend at $150 per share?
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