& cplSiteName &

What's Next for Charter?

Alan Breznick
2/14/2014
50%
50%

Like a fallen Olympic skier, Charter CEO Tom Rutledge now knows all about the agony of defeat.

Just two days after triumphantly unveiling Charter Communications Inc. 's impressive slate of 13 independent nominees for the Time Warner Cable Inc. (NYSE: TWC) board of directors, Rutledge saw his dreams of a cable dynasty go up in smoke Thursday morning when Comcast Corp. (Nasdaq: CMCSA, CMCSK) swept in with a far more attractive $45.2 billion offer for TW Cable. With the deal immediately accepted by TW's relieved and grateful management team, Rutledge's months-long quest has suddenly come to a screeching halt just when he was sensing the thrill of victory. (See Comcast Strikes $45B Deal for TWC.)

Bowing to the inevitable, Charter quickly acknowledged that sobering reality with a brief written statement Thursday. In the statement, the company sought to make the hard-to-believe case that it's really better off without TWC after all.

"Charter has always maintained that our greatest opportunity to create value for our subscribers is by executing our current business plan, and that we will continue to be disciplined in this and any other M&A activity we pursue," the statement said. Company officials declined to say more.

To be fair, Rutledge has made that argument before. On a conference call with financial analysts and press last month, he insisted that Charter would simply re-focus on its own operations and set its sights elsewhere if its hostile takeover of TW Cable failed.

But investors didn't buy that story on Thursday. Charter's stock price, which started the day at $137.57 per share, sank more than 6% to $128.91 by the end of the day after falling as much as 9% in early-morning trading following the announcement of the Comcast-TWC deal.

It probably didn't help matters any that Time Warner Cable CEO Rob Marcus, understandably savoring his company's successful rebuff of Charter, publicly dissed Charter's stock in a conference call Thursday morning. When asked by analysts why TWC would accept an all-stock offer from Comcast when it had been insisting on largely cash from Charter, Marcus replied that comparing the stock of Comcast and Charter was like comparing "apples and oranges."

And it must have hurt Rutledge and his management team even more to know that Comcast might never have made its bid for TWC if Charter hadn't started peddling some of TWC's prime systems to Comcast. In a recent gambit to raise cash and make a deal more appealing to TWC management, Charter reportedly offered to sell TWC's New York City, New England, and North Carolina cable clusters to Comcast if its takeover attempt succeeded. Intrigued by the idea, Comcast apparently began discussing the systems with TWC and the discussions quickly escalated from there. Talk about unintended consequences. (See Comcast May Join Charter Team.)

So now that Charter has lost out to Comcast for the big TWC prize, what does the fourth-largest US MSO do now to boost its size and play with the big boys? Well, it could try to buy some or all of the cable systems with 3 million subscribers that the combined Comcast-TWC plans to sell to cap its size at 30 million video customers. Comcast chairman and CEO Brian Roberts made it clear Thursday that he's open to selling those homes to anybody, including the company that he outmaneuvered.

But those systems, which have not been identified yet, will likely be scattered throughout the US and probably not give Charter the major metro markets and influence that it wants. Comcast, which prides itself on operating in 20 of the top 25 US markets, isn't likely to sell off a Dallas, Houston, Seattle, or Miami cable system cluster to Charter or anybody else. More likely, Comcast will try to sell off smaller systems in less concentrated areas, the same type that Charter predominantly has.

Nor do there appear to be many other places for Charter to turn for a big, quick spike in growth in the increasingly consolidated US cable market. So, unless Rutledge and his team can somehow convince a Cox Communications Inc. , Cablevision Systems Corp. (NYSE: CVC), or Bright House Networks to sell out, Charter may still be champing at the bit for some time to come.

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

(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
albreznick
50%
50%
albreznick,
User Rank: Blogger
2/18/2014 | 9:42:31 PM
Re: Bright House
I agree. I think the Charter team still needs a couple more years to really prove themselves and show that they, and not Neil Smit and his former Charter crew, are the ones turned Charter around. Charter's Q4 earnings call is this Friday morning. Should be fun.  
KBode
50%
50%
KBode,
User Rank: Light Sabre
2/14/2014 | 7:27:01 PM
Re: Bright House
BECAUSE JOHN MALONE WILLS IT! :)

I agree, they have no reasonable reason to sell. John Malone gets what he wants, though. Or he used to, anyway. These days he demands things and then something else entirely happens, as evident by this week's news. 

I wouldn't sell to Charter personally. And I think they have a pretty fresh executive team that needs to prove they know how to turn things around before Wall Street gets even remotely bullish on the idea of them taking on more.
spc_isdnip
50%
50%
spc_isdnip,
User Rank: Lightning
2/14/2014 | 5:40:35 PM
Re: Bright House
Bright House and Cox are both privately owned, I think both by families, so they have no particular reason to sell out.  They are both well run, in much better shape than Charter, and profitable, so why even entertain a deal from the schlockmeister Malone?
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
2/14/2014 | 3:39:27 PM
Why bother
Is there a point to accumulating a bunch of mediocre properties to go along with the less-than-stellar stuff you already have? We're not better, just ... bigger.
KBode
50%
50%
KBode,
User Rank: Light Sabre
2/14/2014 | 8:47:40 AM
Bright House
Does Bright House make geographic sense for Charter? I'd need to look at a map again and remind myself if Charter has any Southern connecting markets.

Cox hasn't seemed to warm to the idea of an acquisition in recent months, and Cablevision in NY would likely be unlikely if it was already rumored Charter wanted to sell off NYC To Comcast if their deal had gone through, yeah?
More Blogs from Breznick Unbound
While cord-cutting surged in the second quarter and promises to rise again this quarter, could the proliferation of OTT services lead consumers back to pay-TV bundles eventually?
Light Reading is teaming up with Interactive TV Works to support the Interactive Launch Competition, a case-study competition that promotes new TV, broadband and online technologies and apps.
In a sign that Google Fiber has all but abandoned ship even in its existing markets, the Alphabet unit reports notably slower video subscriber growth in the second half of 2016.
Despite strong sales of 4k-ready TV sets, the emergence of UHD content and some progress on technical standards, several obstacles remain for the UHD transition.
Whether it's the new DOCSIS 3.1 spec or the forthcoming Full Duplex DOCSIS spec, cablecos are still mainly counting on DOCSIS to rule the broadband space.
From The Founder
NFV's promises of automation and virtualization are intriguing, but what really excites service providers is the massive amount of money they could save.
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.
Women in Comms Introduction Videos
VMWare VP Brings Women Up With Her

8|16|17   |   6:49   |   (1) comment


It's an art and a science to make mentorship, inclusive leadership, diversity and promotion of high-potential women work, says Honore' LaBourdette, vice president of Global Market Development at VMWare.
LRTV Documentaries
5G Spectrum Wars – The Recap

8|15|17   |   2:22   |   (0) comments


Service provider 3 has filed a lawsuit against Ofcom over 5G spectrum auction in the UK.
LRTV Custom TV
Say What? Facebook Unleashes AI Anarchy – The Recap

8|7|17   |     |   (0) comments


A recap of the week's talking points on Light Reading's sister site, telecoms.com. Facebook AI programmers had a bit of a brain-fade as they allowed one of its AI applications to invent its ...
Women in Comms Introduction Videos
Fujitsu's Women Band Together to Help Girls Do STEM

8|2|17   |   9:35   |   (1) comment


Supporting women both inside and outside of Fujitsu is a top priority of the telecom vendor. Yanbing Li, Fujitsu Network Communication's director of System Software Development & Delivery, shares why it's important, but why there's still a long road ahead.
LRTV Custom TV
If You're Not First, You're Last – The Recap

7|31|17   |   08:18   |   (1) comment


In case you missed it, Amazon's 1% stock increase helped Jeff Bezos dethrone Bill Gates as the richest man in the world. Also, Taiwanese electronics manufacturer
Women in Comms Introduction Videos
AT&T's Tech President Preps Workforce for the Future

7|26|17   |   5:47   |   (10) comments


AT&T is focused on the software-defined network of the future and is reskilling its workforce to get ready too, according to AT&T's President of Technology Development Melissa Arnoldi.
Women in Comms Introduction Videos
Cisco: Mentoring Critical to Attract & Retain Women

7|19|17   |   6:40   |   (1) comment


Liz Centoni, senior vice president and general manager of Cisco's Computing System Product Group, shares why mentoring in all its forms is important for women and what Cisco is doing that's made a difference for women in tech.
LRTV Custom TV
Gigabit LTE With Snapdragon 835

7|12|17   |     |   (1) comment


At an event in Wembley stadium, EE used its live network to demonstrate gigabit LTE using a Sony Xperia XZ Premium smartphone with a Qualcomm Snapdragon 835 chip.
LRTV Custom TV
Implementing Machine Intelligence With Guavus

7|12|17   |     |   (0) comments


Guavus unites big data and machine intelligence, enabling many of the the largest service providers in the world to save money and drive measureable revenue. Learn how applying Machine Intelligence substantially reduces operational costs and in many cases can eliminate subscriber impact, meaning a better subscriber experience and higher NPS.
LRTV Custom TV
Unlocking Customer Experience Insights With Machine Intelligence

7|12|17   |     |   (0) comments


When used to analyze operational data and to drive operational decisions, machine intelligence reduces the number of tasks which require human intervention. Guavus invested in Machine Intelligence early. Learn about the difference between Machine Learning and Machine Intelligence.
Women in Comms Introduction Videos
Verizon VP Talks Network, Career Planning

7|12|17   |   4:49   |   (0) comments


Heidi Hemmer, vice president of Technology, Strategy & Planning at Verizon, shares how bold bets and the future of tech define her career.
Telecom Innovators Video Showcase
Masergy's NFV Journey

7|11|17   |     |   (0) comments


Ray Watson, vice president of global technology at Masergy, discusses the advantages and challenges in entering the still-maturing NFV market for the past three years.
Upcoming Live Events
September 28, 2017, Denver, CO
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
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
Intel CEO Leaves Trump Biz Advisory Board
Dan Jones, Mobile Editor, 8/15/2017
Are Cord-Cutting's Days Numbered?
Alan Breznick, Cable/Video Practice Leader, Light Reading, 8/14/2017
Orchestration Startup UBiqube Pivots Away From NFV
Carol Wilson, Editor-at-large, 8/15/2017
Verizon Video Woes Pile On
Mari Silbey, Senior Editor, Cable/Video, 8/14/2017
WiCipedia: Dolly Babes, Manifesto Backlash & 'Brotastic' Failures
Eryn Leavens, Special Features & Copy Editor, 8/18/2017
Like Us on Facebook
Twitter Feed
Animals with Phones
We Know a Tough Day When We See One Click Here
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.