Back to top

Analyst Blog

The Wall Street Journal recently reported that cable TV operator Charter Communications Inc. (CHTR - Analyst Report) is striving to reach an agreement with several banks to raise funds in order to acquire Time Warner Cable Inc. (TWC - Analyst Report).

This announcement has reignited the six-month old rumor in the cable TV industry. Earlier this month, Reuter also reported that Charter Communications is considering another bid for Time Warner Cable before the end of 2013.

The news of a proposed merger between Charter Communications and Time Warner Cable first surfaced after Liberty Media Corp. (LMCA - Analyst Report) acquired a 27.3% stake in Charter Communications for a total consideration of $2.617 billion. Liberty Media is aggressively pursuing the idea of Charter Communications acquiring a major cable TV operator in the U.S., such as Time Warner Cable.

Nevertheless, Time Warner Cable rejected the earlier acquisition attempt by Charter Communications. Earlier this year, Charter Communications acquired Cablevision Systems Corp.’s (CVC - Analyst Report) western U.S. cable systems unit, Optimum West, for around $1.6 billion in cash.

 A recent analysis by Leichtman Research Group Inc. revealed that the cable TV operators in the U.S. are gradually losing hold in the pay-TV market. Internal dynamics of the pay-TV market is slowly shifting toward fiber-based video offerings of large telecom and satellite TV operators. Video offering is the core business area of the cable TV operators, which is slipping out of their hands.     

Leichtman also stated that the top nine U.S. cable TV operators had a net loss of 600,643 pay-TV customers in the third quarter of 2013. This was cable TV industry’s biggest net loss after the third quarter of 2010. Time Warner Cable lost a whopping 306,000 residential pay-TV subscribers in the said quarter.

At this juncture, consolidation in the cable TV industry may become a logical conclusion. The U.S. telecom sector is witnessing massive consolidation drive in order to attain sufficient spectrums and economies of scale.

Meanwhile, Time Warner Cable recently stated that before finalizing any deal, the company will thoroughly evaluate whether the deal will add sufficient value to its investors. Currently, both Time Warner Cable and Charter Communications have a Zacks Rank #3 (Hold).   

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
GREEN PLAIN… GPRE 36.46 +3.79%
MATRIX SERV… MTRX 30.90 +2.93%
ENZO BIOCHE… ENZ 5.20 +2.77%
GENTIVA HEA… GTIV 15.82 +2.73%
VIPSHOP HOL… VIPS 191.34 +2.23%