Charter COO John Bickham Rips Time Warner Cable on Conference Call
On a conference call intended to ratchet up the pressure on Time Warner Cable to accept its merger offer, Charter Communications COO John Bickham slammed his competitor with a wide-ranging, nasty critique that gives new meaning to the phrase "hostile takeover."
Bickham said that TWC has exhibited a "failed operating strategy revealed by fact that they are losing customers at an alarming rate," and said the trend isn't over just the past year, but rather the past decade.
The Charter executive expressed his negative feelings about the quality of TWC's TV signal and the lack of HD channels -- "It appears that Time Warner didn't want to spend the money to go all-digital," he said -- and blasted the company for offering slow Internet packages at deeply discounted prices. But his competitor's service isn't cheap, he added. TWC "has fallen into the trap of nickel-and-dime charges to customers."
Not stopping there, Bickham then picked apart how TWC manages its 50,000 employee workforce. "TWC never had a vision on high standards," he claimed.
Bickham told those listening in on the conference call that when he first looked at a merger, he thought TWC's turnaround would look much like Charter's. But after further research, he concluded, "It's obvious the turnaround for TWC requires more work than originally thought."
Charter has offered $132.50 a share, plus the assumption of debt, which amounts to about a $61 billion bid. TWC has called the bid "grossly inadequate" and a "non-starter." TWC CEO Rob Marcus is said to be demanding something closer to $160 a share, prompting Charter, in which John Malone's Liberty Media owns a large stake, to take a proposal directly to TWC's larger shareholders.
News of the acquisition interest by Charter, and possibly Comcast, hasn't hurt TWC's share price. Just nine months ago, TWC was trading at under $100. Today, it's at $136 after about a 3 percent climb on Tuesday. Part of Charter's refusal so far to up its bid is that TWC's stock price might be reflecting an expectation of a merger. Then again, some analysts, like Macquarie's Amy Yong, thinks a $150-a-share bid is warranted.
Bickham, in contrast, doesn't believe that TWC should pass on the offer on the table. He says the Charter target can't win subscribers by merely offering a "free DVR for three months with a $19.95 video package."
On a conference call, Charter CEO Tom Rutledge was only slightly less negative.
"This deal has to happen in a way that creates value for all shareholders," he said. "For Charter, much of the heavy lifting is already done, and we are on a growth trajectory. We could be acquiring smaller and less-troubled assets."
Putting on his good-cop hat for a moment, Rutledge touted the promise of a marriage, saying that consolidation would make sense given the goals of controlling programming costs and providing better services.
In response to the harsh comments, Time Warner released a statement on Tuesday describing the proposal as "grossly inadequate."
"There was nothing in Charter's presentation and call today that changes the fact that its proposal is grossly inadequate. We have engaged with Charter, but Charter is not prepared to pay for a one-of-a-kind asset that Tom Rutledge referred to today as the biggest and best M&A option available," read the statement received by The Hollywood Reporter.
"We are confident in our stand-alone plan, and we are not going to let Charter steal the company."
If the two companies merged, the combined entity would be the third-largest multichannel video programming distributor.