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CHTR - Charter Communications


Guest JoelS

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  • 4 weeks later...

Apparently Verizon tried to buy CHTR:

 

http://nypost.com/2017/05/31/cable-giant-charter-snubbed-a-buyout-bid-from-verizon/

 

Verizon boss Lowell McAdam, his company facing slowing sales of mobile phones, made a proposal to acquire cable-TV giant Charter Communications in recent months, three sources told The Post.

 

The offer — valued at between $350 and $400 a share, and well over $100 billion, according to two of the sources familiar with the move — was rejected by Liberty Media-controlled Charter because it was too low — and because Charter was not ready to sell.

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If Charter owners wanted their equity to contain Altice they would make an offer and Drahi could become a shareholder alongside Malone, Newhouses, Buffett etc. If Charter owners wanted a massively levered equity they could do it without Drahi and still stay in control.

 

So, if Altice wants to be in control and cash out the Charter owners they need to make a cash offer attractive and enough to pay all off everyones taxes - probably +$500.  Don't see how Altice could open their mouth wide enough for a mainly cash offer at $150bn.

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That's true.  But he also very much regretted taking AT&T stock and watching it dissipate while he stood on the sidelines and couldn't do anything because of lockup.  I would guess his price differs depending upon cash vs. Altice/Softbank stock.

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Remember he sold TCI to AT&T at nice multiple of EBITDA (12x I think).  If someone is willing to offer a high enough multiple, the business is for sale.

 

Packer

 

There were other reasons for the sale of TCI as well, mainly the upcoming satellite competition (and lesser so the internet threat). This is well explained in "Cable Cowboy".

But on top of that, Malone succeeded in extracting a very attractive price as well. It was perfectly executed, but afterwards he was stuck with a unsalable minority interest in ATT which stung him big time.

 

So Malone was not only motivated by the price of the deal. I don't have the feeling he's in the same situation right now (as of yet).

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CHTR Q3:

 

http://ir.charter.com/phoenix.zhtml?c=112298&p=irol-newsArticle&ID=2311569

 

Key highlights:

 

Third quarter total customer relationships increased 212,000, compared to 275,000 during the third quarter of 2016, when excluding the impact of customer activity related to Legacy Bright House's seasonal customer plan in 2016.2 Third quarter total residential and SMB primary service units ("PSUs") increased by 257,000, while third quarter 2016 PSUs grew by 395,000, when adjusted for the seasonal customer program changes at Legacy Bright House.

Third quarter revenues of $10.5 billion grew 4.2%, as compared to the prior year period, driven by residential revenue growth of 4.4% and commercial revenue growth of 8.0%, partly offset by a decline in advertising revenue of 11.1%, due to lower political revenue.

Third quarter Adjusted EBITDA3 of $3.8 billion grew 5.0% year-over-year, and 4.7% when excluding transition costs.

Net income attributable to Charter shareholders in the third quarter declined to $48 million from $189 million during the same period last year. The decline was driven by an increase in depreciation and amortization in the third quarter of 2017, partly offset by a year-over-year increase in Adjusted EBITDA.

Third quarter capital expenditures totaled $2.4 billion, and $2.3 billion when excluding transition capital expenditures.

During the third quarter, Charter purchased approximately 10.9 million shares of Charter Class A common stock and Charter Holdings common units for approximately $4.0 billion.

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