John Malone, chairman of Liberty Media Corp (NASDAQ:LMCA) aims to regain his status as the “King of Cable” and shake up the entire industry as he works behind the scenes to acquire Time Warner Cable Inc (NYSE:TWX), according to report from DealBook.
Malone previously led cable company
Malone led Tele-Communications, Inc (TCI), the largest cable company in the United States for more than two decades during the 1980s to 1990s. He sold TCI to AT&T Inc. (NYSE:T) for $48 billion in 1999.
Time Warner Cable Inc (NYSE:TWC) is the second largest cable company in terms of subscribers. Malone will be able regain his industry crown once Liberty Media Corp (NASDAQ:LMCA) inks a deal to control Time Warner.
Cable operators facing challenges
Currently, the cable operators are facing challenges as many consumers move towards Netflix, Inc. (NASDAQ:NFLX) and other online video streaming providers. Despite the challenges confronting the cable industry, Malone is excited with the prospect of returning to the competition, according to Gregory Mafei, chief executive officer of Liberty Media Corp (NASDAQ:LMCA).
Maffei said, “John looks out and says, ‘That’s an industry that I helped shape, that made me a lot of money, but more importantly that I care a lot about, and I want to see that industry set right.” He added that Malone believes that the cable operators need to merge to transform the industry. According to him, “We have expressed a view that consolidation is helpful. Time Warner Cable Inc (NYSE:TWC) is appealing.”
Citigroup’s media analyst, Jazon Bazinet commented, “We’re always looking at how Malone gets a path to control. Malone is patient. He’ll sit there like a snake in the weeds for five years and then he’ll pounce.”
Liberty Media’s deal with Time Warner
Liberty Media Corp (NASDAQ:LMCA) started its initiative to strike a deal with Time Warner Cable Inc (NYSE:TWC) after it purchased 27% stake in Charter Communications, Inc. (NASDAQ:CHTR), the fourth largest cable operator in the country. Charter Communication’s CEO, Thomas M. Rutledge supports a merger with Time Warner.
Charter Communications, Inc. (NASDAQ:CHTR) might face potential problems for its bid to acquire Time Warner Cable Inc (NYSE:TWC) because it is a smaller company. It needs to incur a huge amount of debt to fund the transaction.
Time Warner’s outgoing CEO Glen Britt previously stated that the company is open to any deal if the price is right. To strike a deal, Charter Communications need to offer a very generous premium on top of the current stock price of Time Warner, which already climbed 24% this year.
In addition, Comcast Corporation (NASDAQ:CMCSA), the largest cable operator in the country, is also planning to submit a proposal to control Time Warner Inc (NYSE:TWX).