Fri, Aug. 28, 8:24 PM
- The telecom/media sectors have been ripe for merger activity and speculation with more than 360 telecom deals announced this year, but cheaper targets are getting harder to come by -- that, according to two of the big spenders.
- Speaking at CTAM in Amsterdam, Charter Communications (NASDAQ:CHTR) Chairman Eric Zinterhofer said “Asset valuations are high -- we’re not going to pay 9, 10 or 11 times” earnings multiples. Charter's in the middle of assembling funding for its $78.7B buyout of Time Warner Cable (NYSE:TWC) and Bright House Networks. Interest rates will have to rise before the valuations come down, he says.
- France's Altice (OTCPK:ATCEY), briefly considered a bidder for TWC and harboring ambitions to expand in America, will focus on digesting existing deals, like its purchase of Suddenlink Communications, and including integrating French wireless firm SFR with cableco Numericable.
- “There are no obvious targets for us, not KPN, not anyone else -- it all depends on price,” says Altice CEO Dexter Goei. “There’s a scarcity of assets that are cheap, but if a stock is too expensive today, maybe we’ll look again in two years when China blows up or something else happens. We’re always opportunistic.”
- Previous coverage of Charter/TWC/Bright House
Fri, Aug. 28, 12:50 PM
- Barclays' Kannan Venkateshwar has raised the firm's price targets on merger partners Charter Communications (CHTR -0.8%) and Time Warner Cable (TWC -0.7%), noting growing operating leverage and what looks like a conservative take on synergies.
- The price target on Charter was raised to $204, from $157. Based on that, Venkateshwar raised the target on Time Warner Cable to $206, from $166.
- Time Warner Cable is currently trading at $186.63, implying more than 10% upside, while Charter's trading at $180.28, implying more than 13% upside.
- Charter's seeing operating leverage for the first time after years of investment, Venkateshwar says, boosting confidence that it could generate earnings growth after engulfing TWC and Bright House Networks.
- Venkateshwar estimates synergies close to a $1B, higher than Charter's guidance to $800M, and believes the company may be able to boost better margin expansion -- closer to that of Comcast.
Tue, Aug. 25, 5:35 PM
- investors should stick with "market darlings" - the 25 stocks that had performed the best during the six months before a market pullback - according to the analyst team at RBC.
- The firm notes that although many recent winners are leading the market lower, the extent of the underperformance is just 1%; it also says investing in the group following sharp market pullbacks is a winning strategy over the ensuing week, month and six months.
- RBC's 25 market darlings are AET, ALTR, AMZN, AIZ, CVC, CI, CAG, EA, EQIX, EXPE, GME, GOOGL, HAS, HCA, MNST, NFLX, NKE, PRGO, REGN, SBUX, TSO, TWC, TSS, UA, UHS
Thu, Aug. 20, 7:29 PM
- At least one end result of media consolidation will be all of the big four wireless firms linking up (via merger or alliances) with pay TV, says Oppenheimer's Tim Horan, with a prediction for the four survivors: AT&T, Verizon, Sprint -- and Comcast.
- "Regardless of the timing, we expect all four wireless carriers to align with a paid TV provider in some form," Horan says. He writes that Oppenheimer sees Comcast (NASDAQ:CMCSA) and T-Mobile (NYSE:TMUS) aligning somehow, though Comcast denied interest in outright acquiring the carrier in June.
- Comcast's hand might be forced by AT&T's (NYSE:T) plans for product bundling now that it's closed on DirecTV (NASDAQ:DTV). Charter (NASDAQ:CHTR) -- currently busy trying to acquire Time Warner Cable (NYSE:TWC) -- could deal for wireless as well, as it expands its public Wi-Fi.
- Horan also thinks that Verizon (NYSE:VZ) might be the only real buyer for Dish Network's (NASDAQ:DISH) spectrum haul, which might come on the block after the FCC denied Dish $3.3B in spectrum-auction discounts. Oppenheimer sees only a 10% chance that Dish buys T-Mobile.
- SoftBank had explored a sale of Sprint (NYSE:S) to TV providers including Comcast and Altice, unsuccessfully, and a potential merger with T-Mobile is considered at least as far off as the 2016 presidential election.
Mon, Aug. 17, 3:34 PM
- With a rack of 13F filings on the weekend disclosing Q2 holdings, it turns out that Time Warner Cable (TWC +2.1%) was among the top adds by hedge funds and influential investors.
- The company -- in the long process of being acquired by Charter Communications (CHTR +3.6%) -- got new stakes from 7.7% of filers, according to WhaleWisdom.com, which tracks 196 funds. Among those, Soros Fund Management took a 1.45M-share position.
- Only Perrigo (PRGO +0.6%) was added by more filers, at 10.2%. Investors filing that they had opened new buys of TWC came to 16.7M shares added in aggregate.
- On the other hand: TWC was also eliminated by the highest percentage of filers -- 6.6%, getting rid of 8.89M shares. On a net basis, acquisitions of shares still outnumbered dispositions. The second-biggest stock eliminated was Applied Materials (AMAT +2.3%), cut by 6.1% of filers who shed 28.36M shares in aggregate.
- Previously: Buffett 13-F and media: Bought Charter, cut stake in Viacom (Aug. 14 2015)
- More 13F coverage
Fri, Aug. 14, 6:10 PM
- Along with Warren Buffett cutting stakes in energy (but leaving Berkshire's "Big Four" alone), the latest 13F filing shows a telecom/media changeout as well.
- Berkshire Hathaway (BRK.A, BRK.B) boosted its stake in Charter Communications (NASDAQ:CHTR) -- itself in the process of buying out Time Warner Cable (NYSE:TWC) -- by 42%, to about 8.5M shares ($1.5B worth).
- In the other direction, its stake in Viacom (VIA, VIAB) declined by 32%, to about $250M worth.
- A notation that confidential information has been omitted suggests a secretive stake is being built -- Berkshire used such a notation while building an IBM stake in 2011 -- but confirmation won't come for three months, in mid-November.
- After hours: VIAB +0.8%; CHTR +0.1%.
- 13F filing
Thu, Jul. 30, 9:42 AM
- Time Warner Cable (NYSE:TWC) is up 0.2% out of the open after a Q2 miss on top and bottom lines as costs rose in several areas, including content acquisition and sales and marketing.
- The cableco did post its first positive Q2 for net customer adds since 2008. It added 66K net residential customer relationships, its best Q2 on that front ever.
- Operating income dropped 11.5%, to $1.03B, in part due to higher depreciation from TWC Maxx and other investments, while EPS dropped 18.5% to $1.54. Aggressive investing along with pension expenses led adjusted OIBDA down 1.2% to $2B.
- Revenue breakouts: Residential services, $4.76B (up 2.1%); Business services, $803M (up 16.2%); Other, $431M (down 1.1%). Of residential services, video revenue was $2.51B (down 1.3%); high-speed data, $1.74B (up 8.5%); voice, $478M (down 2.4%). For business services, video, $95M (up 5.6%); high-speed data, $391M (up 18.1%); voice, $147M (up 19.5%); wholesale transport, $120M (up 23.7%).
- A residential video net decline of 45K customers and residential high-speed data net adds of 172K also marked TWC's best Q2 in those areas since 2008. Residential voice net adds of 252K and triple play net adds of 233K represented its best Q2 ever.
- Press Release
Thu, Jul. 30, 6:02 AM
Mon, Jul. 20, 4:09 PM
- Charter Communications (CHTR +0.9%) is moving forward steadily on its plan to acquire Time Warner Cable (TWC +1%), hiring D.C. lobbyists to help seal the deal in a regulatory environment where nothing's a sure thing.
- The company has signed up a handful of telecom specialists to usher the deal through Washington, though a major hurdle was surely cleared when Netflix wrote the FCC in support of the takeover.
- Meanwhile, on the funding side, Charter is raising eyebrows as it's set to become one of the biggest borrowers not only of investment-grade debt but of junk as well, as it tries to set up a deal that values TWC at $78.7B including debt.
- Charter's already been the third-most active borrower this year, just behind JPMorgan Chase and Actavis; the buyout could leave Charter with up to $66B in debt, and bonds sold by Charter and TWC are losing many times the broader market in 2015.
- A debt-stoked buying spree had bankrupted Charter in 2009. “Charter is walking on a razor’s edge,” says CreditSights' Chris Ucko. “This is a very unique capital structure, especially given Charter’s size, and very appealing for the issuer. For investors caution is understandable.”
- Previously: Charter, TWC up after interconnection deal wins Netflix support (Jul. 15 2015)
Wed, Jul. 15, 5:38 PM
Wed, Jul. 15, 1:07 PM
- Charter Communications (CHTR +2%) and Time Warner Cable (TWC +1.3%) are on the move this afternoon as Charter draws an important ally in its TWC takeover: Netflix (NFLX -2.2%) is endorsing the deal, telling the FCC of "substantial public interest benefit."
- Charter is offering free interconnection with content/longhaul providers until December 2018, and that's enough to win Netflix's support for the TWC deal -- if Charter keeps that promise.
- "Charter's new peering policy is a welcome and significant departure from the efforts of some ISPs to collect access tolls on the Internet," Netflix's letter reads.
- Netflix's opposition to Comcast's deal for TWC is believed to have held a lot of weight in the breakup of that takeover.
Thu, Jul. 9, 9:00 AM
- Charter Communications (NASDAQ:CHTR) is pursuing a six-part benchmark bond deal for pricing today, in seeking funding for a $56B acquisition of Time Warner Cable (NYSE:TWC).
- The investment-grade bond is part of a package that's likely to take shape over the coming week with high-yield bonds as well as bank debt, in a funding package that could come to $31B.
- Goldman Sachs is global coordinator for the high-grade deal, with BofA Merrill Lynch and Credit Suisse as active books.
- Time Warner Cable is +0.9% premarket.
- Previously: Reuters: Charter may seek multibillion-dollar bond tomorrow for TWC deal (Jul. 08 2015)
- Previously: FCC sets team to review Charter-TWC merger (Jul. 08 2015)
Wed, Jul. 8, 5:06 PM
- Charter Communications (CHTR -1.5%) may be hitting the high-grade debt market tomorrow with a multibillion-dollar M&A bond for its Time Warner Cable (NYSE:TWC) acquisition, Reuters reports.
- That's still dependent on conditions -- which have been shaky recently, with Greece and China weighing heavily on investors' minds.
- "The investment-grade (portion) is expected tomorrow, the high-yield maybe next week," said one of Reuters' buy-side sources of a funding plan that likely comes to more than $30B.
- It will come down to a Thursday morning decision based on the state of world markets.
Wed, Jul. 8, 4:14 PM
- Progress at the FCC -- though maybe not as quick as investors like -- as the agency's chairman, Tom Wheeler, has picked the team to review the Charter-Time Warner Cable merger deal.
- The agency's general counsel, Jonathan Sallet, will head the team, which also includes the same senior economist (William Rogerson) who worked on the Comcast-TWC deal and the AT&T-DirecTV merger. Former Justice Dept. antitrust attorney Owen Kendler will head the transaction review team.
- Today: CHTR -1.5%; TWC -1.4%.
Tue, Jul. 7, 6:45 PM
- A big fiber buildout from AT&T (T +0.5%) is likely to hurt big cable, including Comcast (CMCSA +0.6%), Charter (CHTR +0.5%), Time Warner Cable (TWC +0.7%) and Cablevision (CVC +1%), analyst Craig Moffett says, and it's reminiscent of the mid-2000s.
- Documents from AT&T show that after wrapping its DirecTV merger, it plans to run fiber past the equivalent of 11.7M homes, he notes. The catch is exactly where that fiber runs, and how much that overlaps the cablecos' footprints.
- Cable analysts, he says, will have to "adjust their models to reduce both growth and pricing power assumptions.”
- Moffett estimates that Comcast may have the biggest change in overlap, to 22% from 18%. For Charter, it would go to 12% from 7%. And a Charter-Time Warner Cable combination would go from a 17% overlap to 21%.
Tue, Jun. 30, 11:23 AM
- Cable and wireless firms are on the (legal) clock, as a D.C. appeals court is setting an expedited schedule for them to provide briefs on the set of challenges to FCC net neutrality rules.
- Firms will need to provide their opening briefs (20,000 words or fewer) by July 30, meaning final briefs will be due Oct. 13, and oral argument could begin by year's end.
- The disputes now are largely around Title II reclassification (Internet access as a utility) and interconnection, rather than bans on blocking/throttling or paid prioritization.
- Represented/related companies: VZ, TMUS, S, CMCSA, CHTR, TWC, CVC, CTL, FTR, CCOI, DISH, DTV
TWC vs. ETF Alternatives
Time Warner Cable Inc provides video, high-speed data and voice services. The Company also offers security and home management services, networking and transport services and enterprise-class, cloud-enabled hosting, managed applications and services.
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