Liberty Broadband Corp. Chief Executive Greg Maffei said any
deal its part-owned cable affiliate Charter Communications Inc.
pursues with Time Warner Cable Inc. would be a "friendly
transaction," after its hostile approach more than a year ago
backfired.
On an earnings call with analysts Friday, Mr. Maffei spoke up
about Charter's potential consolidation ambitions publicly for the
first time since Comcast Corp. abandoned its merger with Time
Warner Cable last month.
Mr. Maffei said a deal between Charter and Time Warner Cable
would look for "the best of breed in both management teams" and try
to "drive an improved experience both for consumers and
shareholders going forward." The tone starkly contrasts with the
hostile approach Charter took more than a year ago, when it argued
that its operating team, led by Charter CEO Tom Rutledge, was
superior to the TWC management led by CEO Rob Marcus. Comcast
swooped in last year to strike a deal with Time Warner Cable,
scuttling Charter's aggressive campaign.
In any transaction, Mr. Maffei said Liberty wants to maintain
its 25% voting stake in Charter. Liberty has a "wide range" of ways
to raise capital to maintain the stake, if needed, Mr. Maffei said,
adding that the company has $700 million in cash.
Mr. Maffei said "many" potential partners have expressed
interest in investing alongside Liberty if Charter needs to raise
more capital. Buying Time Warner Cable would require Charter to
borrow a significant amount of money, but equity partners could
help reduce the resulting leverage of the combined company.
A bigger question is whether regulators would sign off on cable
consolidation. Mr. Maffei addressed the regulatory landscape that
the cable industry has faced over the past year, as the Federal
Communications Commission has opted to impose stringent new
broadband regulations and prepared to challenge the Comcast-Time
Warner Cable merger.
Some people close to the current deal talks--which amounts to a
love triangle between Time Warner Cable, Charter and the smaller
closely held operator Bright House Networks LLC--have said it
remains a question of how kindly regulators would look upon a
three-way cable merger of that size.
Mr. Maffei acknowledged that regulators may have their fears
about another cable merger, especially regarding broadband market
power. But he expressed hope that regulators would view Charter
favorably since it is already invested in boosting its broadband
speeds to a minimum of 60 megabits per second.
"I think we should be able to, given the relatively small size
of Charter today, convince them that is not an issue," Mr. Maffei
said. "But certainly people would be judicious and thoughtful
before any deal went forward."
Building the best experience for consumers requires technology
investments and "large dollars and large scale," Mr. Maffei said.
Cable consolidation "will surely add to that" and help the cable
industry combat the size of big content companies and potential
technology competitors, he said.
Some people familiar with Charter's thinking have noted that a
three-way cable combination would still be smaller than Comcast's
size today, and may not invite the same type of regulatory scrutiny
since none of those operators also own an entertainment company
like Comcast's NBCUniversal.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
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