TWC defiant against Charter bid

Michelle Clancy | 21-01-2014

Despite Charter's ongoing exuberance for acquiring his company, Time Warner Cable chairman and CEO Rob Marcus is not negotiating on the price.

"We were very explicit: we're not negotiating," Marcus told Multichannel News. "$160 [per share] is what it takes to get anything done."

And, unhappily for Charter, he's not interested in a leveraged deal, either: "And it's not just $160," he said. "It's $160 with $100 in cash and a 20% collar. [If] any of those elements are not there, then $160 is not interesting."

Charter has made a $132.50-a-share (or $38 billion) offer for TWC that Marcus rejected almost immediately, prompting Charter CEO Tom Rutledge to call TWC a "turnaround project" with abysmal customer satisfaction. He also noted that TWC has a "failed operating strategy" that goes back at least five years, even before it lost more than 300,000 subscribers in the third quarter of 2013 after a programming battle last year with CBS.

Charter, the No 4 MSO, is recovering from bankruptcy and has a much smaller market cap than TWC; it plans to use mostly debt to finance the deal.

Meanwhile, Comcast has been approached to join the bid with Charter a move that is likely to gain federal approval, unlike a Comcast-only takeover. The two could divvy up TWC's assets to strengthen their footprints in key markets like Los Angeles and New York. And TWC has made it clear that it would welcome a Comcast bid given the company's cash stores and overall health. But, Comcast hasn't thrown its hat in just yet.

"[Comcast CEO] Brian Roberts is very much a kingmaker here," Todd Mitchell, an analyst at Brean Capital LLC in New York, told Bloomberg. "Not only can Comcast offer more cash and give the resulting entity less leverage, it has a proven track record as an operator. Comcast could be a better steward for Time Warner Cable's assets going forward."