& cplSiteName &

Charter's $61.3B Bid for TWC Rebuffed Again

Alan Breznick
1/13/2014
50%
50%

Charter Communications President and CEO Tom Rutledge is tired of pussyfooting around with Time Warner Cable. But his patience is about to be tested further. (See Charter Makes $61B Offer to Acquire TWC .)

In a long-awaited move, Charter Communications Inc. formally bid more than $61 billion, including debt, for Time Warner Cable Inc. (NYSE: TWC) late Monday afternoon. The unsolicited offer, which pegs TW Cable's market value at about $37.3 billion, or $132.50 per share, consists of nearly two-thirds cash with the rest in Charter stock, according to various press reports.

Very shortly thereafter, though, the TWC board unanimously rejected the third offer as "grossly inadequate," saying it falls short of the standards set by past cable deals. (See TWC Rebuffs Charter's Latest Offer.)

In an open letter to new TW Cable Chairman and CEO Rob Marcus that Charter posted on its website earlier, Rutledge said his company was making the bid now after repeated overtures to its fellow MSO over the past six months made no headway. He also noted that TW Cable officials rejected Charter's previous offer in talks held last month, prompting Charter executives to go over their heads to TWC shareholders.

But, in a press release issued a couple of hours later, Marcus called the Charter offer "a non-starter" because it represents an EBITDA multiple of only about seven percent. Marcus also said the actual value delivered to TWC shareholders could be well below that, because shareholders would largely be receiving Charter stock with its inherent risks.

Marcus' statement appeared to be a direct reply to Rutledge's open letter. It was in keeping with past indications that TW Cable is reportedly seeking more like $160 per share.

If successful, the takeover of the second largest US MSO by the fourth largest MSO would make the new Charter-TWC a much bigger power in the American pay TV market. But the new company would still have significantly fewer customers than the two market giants -- Comcast Corp. (Nasdaq: CMCSA, CMCSK) and DirecTV Group Inc. (NYSE: DTV).

For months, Rutledge has argued that his respected management team can run TW Cable more efficiently and profitably. TWC suffered one of the worst financial reporting periods in its history in the third quarter, shedding a whopping 306,000 basic video; 24,000 broadband; and 128,000 phone customers in the wake of a bitter, drawn-out, retransmission-consent battle with CBS Corp. (NYSE: CBS). (See TW Cable Hemorrhages Subs.)

In his letter to Marcus, Rutledge held out a peace branch, saying Charter remains "open to real engagement" with TWC and making term revisions. But he also made it clear that Charter is moving ahead with its offer and "preserving all options going forward."

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

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/15/2014 | 12:02:59 PM
Re: Holding out
Good question, Dan. Not clear what the ansween is. TWC could be counting on either Comcast or Cox to come through for it. But both prospects are looking less likely right now.  
DOShea
50%
50%
DOShea,
User Rank: Blogger
1/13/2014 | 10:10:28 PM
Holding out
What--or who--is TWC holding out for? Is there another company that's going to deliver anything closer to the offer it feels it deserves?
DanJones
50%
50%
DanJones,
User Rank: Blogger
1/13/2014 | 6:59:20 PM
TWC has just rejected the bid.
TWC has rejected the bid:

Rob Marcus, Time Warner Cable's Chairman and Chief Executive Officer, said: "Charter's latest proposal is a non-starter. First and foremost, it substantially undervalues TWC and would represent an EBITDA multiple of approximately 7X, well below past transactions in the cable sector. Indeed, our high-quality assets, unique scale, synergy potential, growth opportunities and strong financial position should command a premium valuation compared to precedent transactions, not the discount offered by Charter. Not only is the nominal valuation far too low, but because a significant portion of the purchase price would be in Charter stock, the actual value delivered to TWC shareholders could be substantially lower given the valuation, operational, and significant balance sheet risks embedded in Charter's stock."
Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue – London
November 10, 2017, The Westin Times Square, New York, NY
November 16, 2017, ExCel Centre, London
November 30, 2017, The Westin Times Square
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Muni Policies Stymie Edge Computing
Carol Wilson, Editor-at-large, 10/17/2017
'Brutal' Automation & the Looming Workforce Cull
Iain Morris, News Editor, 10/18/2017
Worried About Bandwidth for 4K? Here Comes 8K!
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 10/17/2017
What Does Automation Mean to You?
Ray Le Maistre, International Group Editor, 10/17/2017
Animals with Phones
Sometimes Typing Doesn't Do the Trick... Click Here
... and you just have to yell at the screen.
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed
Partner Perspectives - content from our sponsors
The Mobile Broadband Road Ahead
By Kevin Taylor, for Huawei
All Partner Perspectives