Comcast Corp. and Charter Communications Inc. have discussed a joint acquisition bid for Time Warner Cable Inc. that would divide its assets between them.
The talks between Comcast and Charter have been preliminary, and a Time Warner Cable breakup is one option amid several under consideration, said two people, who asked not to be identified because the matter is private. Parts of Time Warner Cable would complement each company’s coverage area.
Time Warner Cable is the nation’s second-largest U.S. cable company. Its Northeast Ohio/Western Pennsylvania unit, based in Akron, is the third-largest corporate division with about 2,000 employees.
Analysts said Time Warner Cable is emerging as an acquisition target amid renewed attempts to consolidate the industry. Companies are looking to bulk up to get more negotiating leverage with networks such as CBS Corp. and Walt Disney Co.’s ESPN. A joint deal would solve issues Comcast and Charter would face if they were to pursue Time Warner Cable separately, the people said.
Breaking up Time Warner Cable would result in a smaller deal for Philadelphia-based Comcast than buying it outright, thus muting regulatory concerns. Charter wouldn’t need to raise as much money to complete a purchase, making an acquisition more palatable, the people said.
Charter, Comcast and Time Warner Cable declined comment.
Comcast has also weighed a solo bid for Time Warner Cable, according to two people with the situation. Regulatory obstacles wouldn’t necessarily be insurmountable for such a transaction because the companies don’t overlap in many regions, said one of the people. The two companies have held some talks, though the process is in the early stages, the other person said.
Charter, backed by billionaire John Malone, has been in discussions with banks, including Barclays Plc, Bank of America Corp. and Deutsche Bank AG, to borrow funds for an acquisition, two people familiar with those talks said. Without a partner, Charter would be bidding on a much bigger rival: Time Warner Cable has an enterprise value of $61 billion, compared with more than $28 billion for Charter.
“Comcast has an advantage through sheer size, and they could make an offer that would be far less debt-laden than one from Charter,” Craig Moffett, founder of research firm MoffettNathanson LLC, said in an interview.
Deutsche Bank, Barclays and Bank of America declined comment.
Time Warner Cable shares shot up $12.06, or 10 percent, on Friday to $132.92.
Shares are up 40 percent, assuming reinvested dividends, in 2013.
There are no statutory limits on the percentage of customers a cable company could own.