There are no permanent allies, just permanent interests – as Charter Communications investor John Malone has just been reminded. He thought he had Time Warner Cable cornered. Despite its protests, TWC would succumb to his bid in time. The only possible spoiler, Comcast, had a handshake agreement to assist Charter by acquiring some TWC assets down the line, to help Charter reduce debt. But Thursday, Comcast announced it wanted all of TWC and stepped up with a $159 per share, all stock, offer (Charter’s offer is $132.50 in cash and stock).
Comcast was going along very nicely on its own. Its investors will wonder why it would spend $45bn in order to take on years of distracting regulatory back and forth, followed by a tricky integration, before a penny of returns is earned.
Comcast is a media conglomerate, ironically resembling Time Warner before it dumped businesses. It is the largest US cable provider with 22m subscribers and owns the NBC broadcast network, cable networks such as E! Entertainment, and the Universal movie studio. In cable, Comcast – unlike TWC – has been a solid operator. Its TV subscribers fell just 1.4 per cent in 2013; TWC’s fell 7 per cent. Comcast’s cloud-based digital video platform, X1, has given it the reputation as the rare innovator in the cable sector.