Charter, Comcast Discuss Splitting Up Time Warner Cable (Report)

Tom Rutledge COO - H 2011
Brendan Smialowski/Getty Images

Tom Rutledge COO - H 2011

The cable giant has rejected a takeover approach from Charter, in which John Malone's Liberty Media owns a stake, but some big shareholders may support a $145-$150 per-share bid.

Charter Communications and Comcast have held preliminary talks about how the two cable operators could split up Time Warner Cable, which Charter is looking to acquire, Reuters reported.

Charter, in which John Malone's Liberty Media owns a 27.3 percent stake, unveiled a $132.50 per-share bid earlier this week, only to get rejected by TW Cable, which argued the price tag offered was "grossly inadequate."

Partnering with top U.S. cable operator Comcast would allow Charter to offer a higher amount. A number of big TW Cable shareholders have signaled that they could support a sale to Charter for $145-$150 per share, Reuters also reported.

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Charter could partner with Comcast for a joint bid or buy the company alone before selling off some TW Cable systems to Comcast. Citing sources familiar with the situation, Reuters said that Charter contacted Comcast on Wednesday about a possible collaboration that would see the latter take over parts of the second-largest U.S. cable operator if a bid ends up being successful.

It was not immediately clear which markets were being discussed, but Comcast would likely be most interested in TW Cable's large markets, such as New York and L.A., analysts have said. They have highlighted that a Comcast bid for all or large parts of TW Cable could raise regulatory concerns.

A Charter spokesman declined to comment. Comcast couldn't immediately be reached.

Late last year, there were reports that Charter and Comcast had similar conversations. Those discussions didn't go far though.

"We still ultimately believe that TW Cable will be sold in pieces and view the stock as remaining closer to the floor price (Charter's $132.50 per-share offer) than its ceiling (TW Cable's $160 request) until the offer is raised or another bidder comes in," said Wells Fargo analyst Marci Ryvicker in a report. 

Twitter: @georgszalai