Liberty's (LMCA) Malone Might be Eying Another Large Deal

June 10, 2013 10:09 AM EDT
Time Warner Cable (NYSE: TWC) is up in early trading Monday following speculation the Liberty Media's (Nasdaq: LMCA) John Malone might be looking for a merger.

One analyst from Moffett Research said the Malone might like to challenge Comcast (Nasdaq: CMCSA) as higher programming costs and fewer new customers are crimping profits in the industry. Malone might move to merge Time Warner, the second-largest cable operator in the U.S., with Charter Communication (Nasdaq: CHTR).

No stranger to M&A in the telecom/cable industry, Malone's Liberty Global (Nasdaq: LBTYA) inked a $24 billion deal to acquire Virgin Media earlier this year, expanding Liberty's exposure in the U.K. Liberty also has a stake in Netherlands-based Ziggo and might move to acquire Germany's Kabel Deutschland.

While Charter has about 4 million U.S. subs and Time Warner has 12 million, Comcast is the de facto leader at 22 million.

Charter also has a high debt load of $12.8 billion, versus its market cap of about $11.5 billion. That might make an acquisition challenging to pull off. Malone might use debt from Charter and Liberty Media to provide for a potential bid, Bloomberg said.

Any acquisition might wait until Malone gets control of Charter. Under the current agreement, Malone can acquire up to 35 percent until January 2016 and 39.99 percent thereafter.

While Charter is lower today, Time Warner is up about 0.8 percent.

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