Exclusive: Liberty sees $700 million Charter-Time Warner Cable synergies - sources

Thu Dec 19, 2013 6:08pm EST
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By Soyoung Kim and Liana B. Baker

NEW YORK (Reuters) - Liberty Media Corp's top executives estimate that a merger between Charter Communications Inc and Time Warner Cable Inc could generate roughly $700 million in annual synergies, according to people close to the matter.

Liberty Chairman John Malone, who wants to use his 27 percent ownership in Charter to consolidate the cable industry, discussed the estimate when he, along with Chief Executive Greg Maffei, met with large Time Warner Cable shareholders in Denver last week, the people said.

Synergies from capital spending reductions, lower annual programming costs and other cuts in operating expenses are a key consideration for Time Warner Cable shareholders, as any takeover offer from Charter would include a large amount of its own stock.

However, Time Warner Cable, the subject of a months-long pursuit by Liberty and Charter, thinks any synergies from a merger would be much lower, at close to $500 million, other people familiar with the matter said.

The timing of Charter's expected cash and stock bid remains unclear, but it may be pushed into the new year given the upcoming holidays, people familiar with the matter said.

Charter had been preparing to send an offer letter as soon as this week, valuing the larger cable operator at below $135 per share, Reuters and others previously reported.

All the people asked not to be named because they were not authorized to speak with the media. Representatives for Liberty, Charter and Time Warner Cable declined to comment.

Besides Charter, top cable operator Comcast Corp and No.3 player Cox Communications Inc are also evaluating options for a potential deal with Time Warner Cable, people familiar with the matter have said.   Continued...

A cable truck returns to a Time Warner Cable office in San Diego, California December 11, 2013. REUTERS/Mike Blake