Liberty Posted November 22, 2013 Share Posted November 22, 2013 They should be able to use the pre-rumor price of ~$90 from June in the negotiations. It will definitely come down to EBITDA multiples primarily though, and TWC doesn't seem to want to give up much on that. CHTR will get some credit for its sub growth (compared to TWC's recent sub losses) and tax assets, but it appears that it will be close to a parity-merger instead of an acquisition. I think you're probably right. I was too much in the acquisition mindset, but if you're merging, all you need is to figure out the relative worth of each company; you don't have to dangle a juicy carrot to convince shareholders to sell you their shares (usually premium to market price). Still, do you think a higher market valuation could put TWC in a better position to negotiate the terms? Link to comment Share on other sites More sharing options...
bmichaud Posted November 22, 2013 Share Posted November 22, 2013 I really really like Nelson Peltz' idea of doing a stock merger at only a slight premium, then doing a buyback for the combined company, as he proposed for pep and mdlz. TWC/CHTR/CVC could easily merge at say 8x ebitda via all stock, then lever up to 4.5 times and so a special dividend or buyback. Link to comment Share on other sites More sharing options...
Liberty Posted November 22, 2013 Share Posted November 22, 2013 Interesting Comcast now getting into the mix. In my biased opinion, this makes a CVC tie up all the more likely, as a unified NYC/Greater NYC asset could be formed between TWC/CVC/CMCSA. What are you referring to here wrt comcast? Not sure if I missed some news. Link to comment Share on other sites More sharing options...
bmichaud Posted November 22, 2013 Share Posted November 22, 2013 Comcast is looking into a TWC bid. Working with anti trust advisors to look at the feasibility. http://www.cnbc.com/id/101220981 If there is any issue, they could combine with CVC then maybe sell some assets off to Charter. Who knows. Many different options available. I'm hoping everything ultimately gets rolled up into LMC and I end up with LMC shares for my CVC shares :) Link to comment Share on other sites More sharing options...
Guest wellmont Posted November 22, 2013 Share Posted November 22, 2013 i don't see regulators approving cvc+twc+comcast. on paper it gets approved. but real world may be different. I think you might see twc and cvc merge and that would make it too expensive for chtr and comcast. Link to comment Share on other sites More sharing options...
Liberty Posted November 22, 2013 Share Posted November 22, 2013 i don't see regulators approving cvc+twc+comcast. on paper it gets approved. but real world may be different. I think you might see twc and cvc merge and that would make it too expensive for chtr and comcast. I don't know. These cable companies are already not competing with each other. If they merge, it doesn't really reduce competition. edit: Also, as mentioned in the CNBC video linked by bmichaud, there are no more official caps on ownership of cable systems. Doesn't mean regulators couldn't cause trouble, but it seems like it would be worse for Comcast, who owns big content producers, than for charter. Link to comment Share on other sites More sharing options...
Liberty Posted November 22, 2013 Share Posted November 22, 2013 http://www.bloomberg.com/news/2013-11-22/comcast-charter-said-to-weigh-joint-bid-for-time-warner-cable.html Comcast Corp. (CMCSA) and Charter Communications Inc. have discussed a joint bid for Time Warner Cable Inc. that would divide its assets between them, people with knowledge of the matter said. The talks between Comcast and Charter have been preliminary, and a Time Warner Cable breakup is one option amid several under consideration, said the people, who asked not to be identified because the matter is private. Parts of Time Warner Cable would complement each company’s coverage area, the people said. Link to comment Share on other sites More sharing options...
bmichaud Posted November 22, 2013 Share Posted November 22, 2013 That's why I was suggesting splitting the entire four company pie into CVC/TWC/cmcsa and charter, with the former containing the northeast assets and charter receiving any further west. TWC has assets in Cali for example. Who knows. Again, numerous combos. Initially TWC and CVC makes the most sense, then working from there - perhaps that combined entity buys CHTR to create an asset that competes with Comcast. I've been saying along CHTR/TWC/CVC makes far too much sense to not do. It would be slightly smaller than comcast, therefore would likely be able to boost ebitda margins to 40% or higher from 35%. Link to comment Share on other sites More sharing options...
bmichaud Posted November 22, 2013 Share Posted November 22, 2013 Well well, joint bid for TWC considered by CHTR and Comcast, while splitting up the assets between NY and other. http://www.cnbc.com/id/101222128 Link to comment Share on other sites More sharing options...
bmichaud Posted November 23, 2013 Share Posted November 23, 2013 Great Barron's write up on Sirius this morning. Interesting rebuttal to the smart phone threat - the cost of data will be a big impediment to streaming music in a car. Link to comment Share on other sites More sharing options...
Liberty Posted November 23, 2013 Share Posted November 23, 2013 Great Barron's write up on Sirius this morning. Interesting rebuttal to the smart phone threat - the cost of data will be a big impediment to streaming music in a car. Thanks. Link: http://online.barrons.com/article/SB50001424053111904253404579210270735806960.html?mod=BOL_twm_ls#articleTabs_article%3D1 Link to comment Share on other sites More sharing options...
Guest wellmont Posted November 23, 2013 Share Posted November 23, 2013 Great Barron's write up on Sirius this morning. Interesting rebuttal to the smart phone threat - the cost of data will be a big impediment to streaming music in a car. don't people already have the data plans? Link to comment Share on other sites More sharing options...
bmichaud Posted November 23, 2013 Share Posted November 23, 2013 Most plans are not unlimited, are they? Link to comment Share on other sites More sharing options...
Guest wellmont Posted November 23, 2013 Share Posted November 23, 2013 Most plans are not unlimited, are they? yes, but most people that would use a cell phone in car have unlimited. it's a risk to them. But I tend to bet with malone. Link to comment Share on other sites More sharing options...
bmichaud Posted November 23, 2013 Share Posted November 23, 2013 Ya I just don't see there being enough unlimited data users out there to upset Sirius' apple cart. I believe Sprint is the only big telco offering unlimited data at this point. But yes those with unlimited plans might as well stream pandora over using Sirius. Link to comment Share on other sites More sharing options...
Liberty Posted November 23, 2013 Share Posted November 23, 2013 Sirius isnt just music, though, which helps. Maffei and Meyer both now think for the long term. In addition to used and connected cars, they talk about millions of dashboards that contain dormant Sirius radios. The equipment could pick up an ad-supported radio stream, via Sirius satellites. "There are going to be 70 million cars that are not subscribers, to whom we can provide some kind of a service," Maffei says. "That's an awful lot of reach into the best cars in the U.S." That's very promising too. Link to comment Share on other sites More sharing options...
Liberty Posted November 25, 2013 Share Posted November 25, 2013 http://dealbook.nytimes.com/2013/11/24/once-cables-king-malone-aims-to-regain-his-crown/ Link to comment Share on other sites More sharing options...
giofranchi Posted November 25, 2013 Share Posted November 25, 2013 Comcast, Charter plot break up of Time Warner Cable - 1:59 AM - Comcast (CMCSA) and Charter (CHTR) have reportedly discussed breaking up Time Warner Cable (TWC) in any joint bid for the company in order to overcome antitrust objections to a deal. - The transaction would resemble Comcast's and Time Warner's acquisition of Adelphia Communications in 2006, when Comcast gained 1.7M customers and Time Warner 3.3M. - A break-up of Time Warner would also make it easier for Charter to gain financing, given that it's much smaller than Time Warner. - Meanwhile, the NYT carries a profile of John Malone, whose Liberty Media (LMCA) owns 27% of Charter. The article reports that Time Warner Cable has contacted Comcast about a possible transaction, leading to early talks. Gio Link to comment Share on other sites More sharing options...
fareastwarriors Posted November 25, 2013 Share Posted November 25, 2013 http://dealbook.nytimes.com/2013/11/24/once-cables-king-malone-aims-to-regain-his-crown/?ref=business&_r=0 A little profile on John Malone in the NY Times. Link to comment Share on other sites More sharing options...
bmichaud Posted November 27, 2013 Share Posted November 27, 2013 About frigin time CVC is moving independently of the other cable cos. No way you restructure the industry by geography without consolidating CVC with comcast/TWC NY assets. Link to comment Share on other sites More sharing options...
dcollon Posted November 28, 2013 Share Posted November 28, 2013 Charter Arranging $25 Billion in Debt for Time Warner Cable Bid http://online.wsj.com/news/articles/SB10001424052702303562904579224373831508940?mod=WSJ_business_whatsNews Link to comment Share on other sites More sharing options...
Liberty Posted November 28, 2013 Share Posted November 28, 2013 Charter Arranging $25 Billion in Debt for Time Warner Cable Bid http://online.wsj.com/news/articles/SB10001424052702303562904579224373831508940?mod=WSJ_business_whatsNews I don't have a WSJ sub anymore, but this seems to be similar: http://www.bloomberg.com/news/2013-11-27/charter-said-to-raise-25-billion-to-acquire-time-warner-cable.html Charter Communications Inc. (CHTR) is nearing an agreement to secure $25 billion in debt to help finance an acquisition of Time Warner Cable Inc. (TWC), a person with knowledge of the matter said. The person asked not to be identified because the process is private. Based on that amount of debt, Charter could then offer about $90 per share for the company in cash, according to the amount of Time Warner Cable shares outstanding. Charter’s current market value is about $14 billion. No idea if there's any truth to this, but if there is, that's quite a lot of debt. Quite different from the all-stock merger of equals that many are expecting. Maybe Malone figures that debt won't ever be this cheap again, and that after operation improvements from Charter's management team and content discounts from scale, this is the cheapest way to do it. He certainly doesn't like issuing new shares if he doesn't have to. Link to comment Share on other sites More sharing options...
bmichaud Posted November 28, 2013 Share Posted November 28, 2013 Malone likes to operate around 5x ebitda. I believe TWC's net debt is 3.5x ish, which leaves about $15B of capacity. If Malone historically has been comfortable with 5x at higher rates, no reason he shouldn't go up to even 6x in this environment. CHTR could pretty easily handle a $170 bid with cash and stock bringing net debt up to 5x. Only reason it works is CHTR trades at 8 to 9x ebitda. Link to comment Share on other sites More sharing options...
bmichaud Posted December 2, 2013 Share Posted December 2, 2013 CVC up another 4% pre mkt. yes lite volume but something is cooking behind the scenes. Link to comment Share on other sites More sharing options...
bmichaud Posted December 3, 2013 Share Posted December 3, 2013 Couple of good clips from Rutlege: 1. Speculation around TWC creating a "frothy experience" 2. CHTR doesn't need to do acquisitions to be successful 3. Cablevision's $450/passing versus $200 for CHTR the opportunity for CHTR growth http://www.cnbc.com/id/101241612 Link to comment Share on other sites More sharing options...
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