& cplSiteName &

TW Cable Strikes Back

Alan Breznick
1/16/2014
50%
50%

Seeking to seize the offensive in its increasingly bitter battle with Charter Communications, Time Warner Cable blasted Charter's latest offer as "grossly inadequate," stoutly defended its operational track record, and buttressed its claims for a much higher buyout price.

In a war of dueling web presentations, Time Warner Cable Inc. (NYSE: TWC) posted its own PowerPoint display on the company's website Wednesday as it sought to counter Charter Communications Inc. 's blistering criticism of its operating performance over the past five years. The 10-slide presentation -- which followed public accusations by TW Cable Chairman & CEO Rob Marcus that Charter was trying to "steal" his company -- spells out TWC's case for a substantially higher bid and bashes Charter for its "low-ball offers" and harsh critique of TWC's operational performance.

"Charter's proposal fails to reflect the significant value of TWC's high-quality assets, unique scale, synergy potential, growth opportunities, and strong financial position," TW Cable asserts in the presentation. "It is materially below precedent transaction multiples, especially transactions of a similar scale to TWC."

In its third and latest bid made public Monday, Charter is offering to pay about $61.3 billion, or $132.50 per share, for TW Cable. That offer followed an initial bid of $114 per TWC share in July and a second bid of $127 per share in October. TW Cable's management and board have soundly rejected all three proposals so far. (See Charter Makes $61B Offer to Acquire TWC and Charter's $61.3B Bid for TWC Rebuffed Again.)

Frustrated by the lack of progress, Charter executives ripped into TWC's go-to-market strategy as they took their takeover bid to Wall Street and TWC shareholders on Tuesday. In a conference call with financial analysts, Charter officials laid out the case for their latest buyout proposal and made a direct appeal to TWC shareholders, urging them to pressure their company's management and board to start serious negotiations. (See Charter Goes Over TWC's Head.)

"We're asking Time Warner Cable shareholders to weigh in now," said Charter President & CEO Tom Rutledge. "We're trying to get management to engage."

Countering those claims, TW Cable officials insist that they have seriously engaged in talks with Charter since last May, meeting with Charter executives numerous times in May, June, July, and December. "We have engaged with Charter, but Charter is not prepared to pay for a one-of-a-kind asset that Tom Rutledge referred to today as the biggest and best M&A option available," TWC said in a terse statement issued shortly after the Charter conference call Tuesday evening.

Challenging Charter's valuation of the No. 2 US MSO, TWC executives argue that their company is actually worth substantially more than the $132.50 per share in Charter's latest offer. They peg TWC's market value at $160 per share, based upon its status as a "premier pure-play cable company," its "unique" scale and attributes, and such earlier major cable industry deals as Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s $71.4 billion acquisition of AT&T Broadband more than a decade ago and the joint $17.6 billion purchase of Adelphia Communications' assets by TWC and Comcast in 2005.

Stung by Charter's withering criticism of TW Cable's operating track record, TWC executives also mount an ardent defense of their company's performance over the past few years. Instead of the "turnaround project" depicted by Charter officials, they portray TWC as an "innovative tech pioneer," citing the company's rollouts of TV Everywhere, smart-home monitoring, WiFi, cloud-based guide, and business services throughout the US. They also point to TWC's nationwide fiber backbone, "deep metro fiber assets," national content delivery network, and "extensive geographic footprint," among other assets.

"TWC is uniquely positioned to deliver scale in the cable industry," the company proclaims in its web presentation, noting that it passes nearly 30 million homes and has more than 15 million residential and commercial customers. "TWC is the only independent, publicly traded cable company of scale."

With the two dueling MSOs now dug deep into their respective trenches quite publicly, it's not clear which one, if either, will blink first. But the battle over TWC's future is likely to get nastier before it gets settled. Stay tuned.

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

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/17/2014 | 6:36:13 PM
Re: Pissing match
Yep, unless Charterisdeliberately trying to undercut TWC employee morate and thereby hurt the company's performance even more. Maybe clever in the short-term but awfully dangerous in the long-term.  
KBode
50%
50%
KBode,
User Rank: Light Sabre
1/17/2014 | 6:23:55 PM
Re: Pissing match
Yeah I didn't even think about the impact that openly degrading the company you're interested in acquiring could have on employees. It seems entirely counter-productive from a professionalism standpoint.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
1/17/2014 | 6:18:36 PM
Re: Pissing match
Reminds me of the old adage: Everything is for sale at the right price.

If Charter raises its price enought, or if market conditions cause Time Warner's price to fall enough, I think the TW execs (who are likely major shareholders) will likely drop all of the negative commentary and will see Charter as their best friend.
albreznick
50%
50%
albreznick,
User Rank: Blogger
1/17/2014 | 6:07:03 PM
Re: Pissing match
I tend to agree. And I wonder if Charter is overplaying its hand. Rutledge may end up stiffening TWC's resolve to resist the merger even further. He's certainly not making many friends and admirers at TWC HQs at Columbus Circle.
KBode
50%
50%
KBode,
User Rank: Light Sabre
1/17/2014 | 1:34:13 PM
Re: Pissing match
It does seem a little more public and toxic than these type of M&A efforts usually are, yes. I understand that Charter wants to portray to investors that their offer was fair and vice versa for Time Warner Cable, though no I've never seen an acquiring company openly debase the products and services of a company they're acquiring, especially when their own products and services aren't entire up to snuff.

Honestly it seems a little bit like amateur hour...especially if you consider the months and months of press leaks by Charter ahead of the actual formal mating dance this last few weeks. 
JimONeill@Ooyala
50%
50%
JimONeill@Ooyala,
User Rank: Light Beer
1/16/2014 | 6:29:23 PM
Re: Pissing match
Hard to see it as not being a "wave of the future," something we likely will see again as more consolidation occurs, especially when it engenders unwanted offers like Charter's for TWC.

More than anything, though, it really seems just like an effort by TWC management to get the most for their company that they can... just as Glenn Britt said before he retired (I THINK it was Glenn), management has the obligation to get the best price they can.

Is the infighting a little more public than usual? Yep. It doesn make for a great read!

Jim
albreznick
100%
0%
albreznick,
User Rank: Blogger
1/16/2014 | 5:56:07 PM
Pissing match
Let's step back for a second and look at what's kappening here. Have we ever seen two large MSOs fight tooth-and-nail like this so publicly and bash each other back and forth? Whatver happened to the congenial cable club? Is this the wave of the future for US cable? Or just a fluke driven by some very unique circumstances?   
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
Alan Bateman, Director, Agile Transformation
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
,
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Between the CEOs
CEO Chat: UXP Systems' Gemini Waghmare

8|26|16   |     |   (0) comments


Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
LRTV Custom TV
F5 Virtual Network Function Integrations With Partner Orchestration Platform

8|24|16   |   6:38   |   (0) comments


F5's Kishore Patnam, product manager for F5's service provider solutions, discusses why service providers are moving towards virtualization and how his clients are utilizing F5's solutions.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cisco Developing 'Monica' Digital Assistant
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/22/2016
FirstNet: A Billion-Dollar Boondoggle?
Dan Jones, Mobile Editor, 8/26/2016
WiCipedia: Should Men Be Included? & Olympians Face Discrimination
Eryn Leavens, Special Features & Copy Editor, 8/26/2016
Google Fiber Can't Be Called a Failure
Carol Wilson, Editor-at-large, 8/26/2016
Google Fiber Downsizing Not Confirmed
Mari Silbey, Senior Editor, Cable/Video, 8/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.