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 Charter approached Comcast on Wednesday to discuss carving up the
second-largest U.S. cable company's systems and subscribers, the
people said, asking not to be named because they were not authorized
to speak with the media.
Charter, the No. 4 U.S. cable provider, and Comcast, the top U.S.
cable provider, are in preliminary discussions about how to
structure a potential alliance, the people said. One possibility is
that Charter buys all of Time Warner Cable and sells off some of its
markets and subscribers to Comcast, one of the people said.
It was not immediately clear which geographic markets are under
discussion, but analysts have said that Comcast would be interested
in Time Warner Cable's largest markets such as New York, Los Angeles
and Dallas.
The two companies held similar discussions late last year but those
talks did not progress at that time.
Comcast, Time Warner Cable and Charter declined to comment.
A successful tie-up would take out Comcast from the bidding for Time
Warner Cable. Comcast, which has also evaluated a takeover bid for
all of Time Warner Cable, was seen as the only likely suitor besides
Charter.
Analysts have said any attempt to merge the two largest cable
operators, however, would face tough scrutiny from U.S. regulators.
Securing backing from Comcast could also allow Charter, with a
market capitalization of around $14 billion, to pay more for Time
Warner Cable, which has a much larger market value of $38 billion.
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Charter, backed by billionaire John Malone's Liberty Media Corp,
formally announced its $132.50 per share bid for Time Warner Cable
on Monday, which the larger rival promptly rejected as too low.
Time Warner Cable instead made a counter proposal worth $160 per
share, including $100 in cash and the rest in stock. A number of
large Time Warner Cable shareholders would support a deal with
Charter if the company sweetens its bid to $145 to $150 per share,
Reuters reported earlier on Wednesday.
Charter has said the combined company may have to do "swaps and
divestitures" of cable systems to serve regions more efficiently,
according to its investor presentation on Wednesday.
Comcast is not interested in doing swaps, but is seeking to buy
systems, one of the people said.
(Reporting by Soyoung Kim and Liana
Baker in New York; editing by Leslie Adler and Richard Chang)
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