Time Warner Cable, Charter Encouraged About Mergers [REPORT]

U.S. regulators may be encouraging consolidation in the cable industry. The news comes in spite of the Federal Communications Commission’s decision to block Comcast’s proposed buyout of Time Warner Cable last month.

Time Warner Cable, Charter Encouraged About Mergers [REPORT]

FCC concerned about competition

Bloomberg‘s Todd Shields reports that sources say FCC Chairman Tom Wheeler called Charter’s and Time Warner Cable’s chiefs to inform them that the agency isn’t entirely opposed to mergers within the telecommunications industry.  The FCC blocked Comcast’s attempt to acquire Time Warner Cable because of worries that the merger would have a detrimental effect on competition in the broadband market.

Wheeler’s phone calls were reportedly in response to comments made by executives of cable companies, who have expressed concerns about the regulatory climate.

Would a Time Warner Cable – Charter deal be better?

There has been a lot of interest in consolidation in the industry as cable companies attempt to not only grow their customer base through acquisitions but also expand their offerings in the internet industry. Cable companies are attempting to be proactive in a time when online TV services like Netflix are putting pressure on them and other traditional TV providers.

Comcast’s offer for Time Warner Cable would have combined the two largest cable companies in the U.S. for $45.2 billion. Wheeler’s reported phone calls to tell Charter and Time Warner Cable that they aren’t outright banning consolidation in the cable industry are certainly interesting.

Cable consolidation

Time Warner Cable rejected advances by Charter Communications last year, but speculations now abound that a deal between Time Warner Cable and Charter could get a green light from the FCC if an offer was made and accepted. Time Warner Cable is the second largest U.S. cable provider, while Charter is the fourth, so a combination between the two may be less worrisome for regulators.

According to Bloomberg, Altice SA approached Time Warner Cable about a potential combination recently. Altice announced this week that it had agreed to acquire the nation’s seventh biggest cable company, SuddenLink Communications.

Also Charter has been talking with Bright House Networks, the sixth biggest U.S. cable company, about acquiring it. The previous deal depended on the Comcast deal going through, so now the two companies are reportedly renegotiating to see if they can get a deal done even though the Comcast offer was blocked.

As of this writing, shares of Time Warner Cable were up 2.87% to $170.37 per share, while shares of Charter were down 1.74% to $175.55 per share.