Is Time Warner Cable Inc. (NYSE:TWC) Willing to Waltz with Charter and Liberty ?


Dallas, Texas 11/05/2013 (Financialstrend) – Time Warner Cable Inc. (NYSE:TWC) got upgraded by Deutsche Bank yesterday. The trading house has upped its price target for the media stock from existing $109 million to a huge $141 over the next few months. This translates to a 14% premium on its close price of $123 on November 4. The ratings upgrade comes on the back of strong showing in its 3Q operations with earnings per share going up by 20% and a substantive 20% increase in its business services revenue. The increase in revenue came in spite of the troubling dip in over all active subscription numbers.

The ratings upgrade has to be seen in context of persistent rumours of likely merger announcement between the second placed cable operator with the smaller market capped Charter Communications Inc. (NASDAQ:CHTR). Media houses have been reporting over the past week quoting people in the know that Charter is pulling out all stops to make sure the share holders of Time Warner would take a liking to the sweetened merger deal. The deal which is purported to be in the works was initially spaced out by John Malone as per insiders who are privy to the discussions. He holds a substantive 25% stake in Charter through his stand alone media company Liberty Media Corp. (NASDAQ:LMCA). The insiders have also indicated that Charter’s enthusiasm for the get together is not being equally reciprocated by Time Warner in spite of participating in the merger discussions. To give readers a sense of the merger dynamics, Time Warner has a market cap of $34 billion, followed by Charter with $13 billion while Liberty lies in between at $18.56 billion market cap.

John Malone has been quoted to have said that “consolidation in the cable industry is becoming increasingly important as rising programming costs, loss of video subscribers, and the emergence of streaming Internet services continue to eat away at profitability”.