Liberty Media CEO Greg Maffei said he didn’t believe that the regulatory concerns that helped kill Comcast’s merger with Time Warner Cable would apply to any future consolidation deals involving Charter Communications, particularly if you consider the Connecticut-based operator’s focus on high speed data service.
“If you’re looking at broadband as being the direction of the future and speeds over 25 Mbps as being the most appealing, the fact that Charter has the highest beginning packaging at 60-to-65 Mbps and has raised speeds faster than any other major cable company would hopefully make them be viewed favorably by any regulator,” Maffei said on a conference call to discuss Liberty Media’s quarterly results.
Liberty has been one of Charter’s biggest cheerleaders and owns about a 25% interest in the cable operator through Liberty Broadband, a separate entity it spun off last year to house its stake. Charter is widely expected to launch a bid for Time Warner Cable – it pursued the cable company for months before it was outbid by Comcast in February 2014 – but regulatory concerns have caused some observers to question the deal. Federal Communications Commission chairman Tom Wheeler said at the recent INTX: The Internet & Television Expo in Chicago that Comcast’s decision to terminate the TWC deal was “directionally correct” but hinted that too much scale, particularly on the broadband front, would not be looked upon favorably.
Maffei said that while any deals would be up to Charter to pursue, he envisioned that any overtures by the Connecticut-based operator toward TWC would be cordial.
“I believe that any transaction that goes forward or if one were to occur would be a friendly transaction, looking for the best in breed for both management teams and trying to drive an improved experience both for consumers and shareholders going forward,” Maffei said.
Maffei would neither confirm nor deny reports that its deal to acquire Bright House Networks was dead. Reuters reported Thursday http://www.reuters.com/article/2015/05/07/us-brighthousenetworks-m-a-charter-commu-idUSKBN0NS2HU20150507 that Bright House had backed out of negotiations with Charter. Although the Bright House transaction was contingent on approval of the Comcast-TWC deal, Charter has an exclusive 30-day window to negotiate a new deal. Even though there are about two weeks left in that period, Bright House has reportedly said it is no longer interested.
But Maffei said that consolidation is critical for the industry if it is serious about moving further into the Internet age.
“The opportunity to build scale to combat not only the scale of the content companies but the scale of potential technology competitors is an attractive option both for shareholders and also for consumers,” Maffei said. “Because the need to make technology investments requires that scale, the need to make improvements in the user interface and to make improvements in the products and services delivered. I think there is every logic for consolidation to go forward. Obviously it has to be done in a way the regulators find workable, and hopefully we’ll be able to find a transaction that makes sense somewhere down the road.”
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