Time Warner Cable’s (TWC) outgoing chief executive Glenn Britt has dismissed media speculation that he is ideologically against M&A with other cablecos and said that he is open to deals.
Speaking on his last quarterly conference call after twelve…
Time Warner Cable’s (TWC) outgoing chief executive Glenn Britt has dismissed media speculation that he is ideologically against M&A with other cablecos and said that he is open to deals.
Speaking on his last quarterly conference call after twelve years in the role, Britt commented: “I read in the press, sometimes directly and sometimes by innuendo, that I am not interested in consolidation and that after I retire, Time Warner Cable might have a more enlightened attitude.
“The implication is that, somehow, I’ve been interested in entrenching myself and my colleagues … That is obviously absurd.”
Britt went on to emphasise that if TWC was to do a deal it would be carefully thought through and that they wouldn’t rush into it.
“We are focused on making money for you rather than just on some fuzzy notion of industry consolidation,” he told investors.
He said that in his experience successful consolidation tended to only happen in a few scenarios, such as when a family wanted to offload their operator as their relatives were not interested in running the business, or when a small cableco was faced with an offer from a bigger player that far-outweighed what it could expect to earn if it continued independently.
Britt also warned against being aggressively acquisitive, pointing to rival Charter Communications’ bankruptcy in 2009 following a string of big deals.
Earlier this year cable veteran John Malone acquired 27% of Charter for US$2.6bn and he has been banging the drum for consolidation following the acquisition. Charter and TWC are said to have held merger talks following that deal.
Britt’s comments came during a conference call regarding the cableco’s Q3 results, which have disappointed analysts.
In a note Craig Moffett of Moffett Nathanson Research said that this made the possibility of M&A involving TWC more likely, and speculated that Malone was holding off from making a bid because TWC’s performance continues to decline, giving them more rope to “hang themselves”.
“Three months ago, we floated the idea that bad news would be good news for TWC, on the idea that bad results would only make a takeover more likely. That has now become a well-accepted view,” Moffett said.
“The shareholder base at TWC is now more leveraged than ever to a takeover,” he said.
“We still believe that the board of directors is inclined to give TWC management time to right the ship, but one must acknowledge that it will now be harder than ever for them to do so.”
Wells Fargo analyst Stephan Bisson felt that despite Britt’s comments, the management team “seemed both hot and cold (if we had to choose one, we would say more cold) when it came to M&A”.
In a memo Bisson said: “We think this management team remains focused on execution although they did say a deal would be plausible if it were in the best interest of TWC shareholders (we think the sentiment here might have been a bit negative towards Charter if we had to guess).”
TWC reported US$5.5bn revenue for the past quarter, adjusted OIBDA of US$2bn, and total net debt of US$23.9bn.
In October TWC agreed a US$600m deal to acquire Dukenet Communications, which owns and operates an 8,700 mile fibre optic network. Dukenet’s network is predominantly across the Carolinas, but also spreads over five other south-eastern states.
