Mergers involving cable MSOs will leave the industry with just "two major players," Charter Communications (Nasdaq: CHTR) CEO Tom Rutledge said in a story published Friday by The Wall Street Journal.
The report comes the day after new Charter board member and equity holder John Malone told reporters he sees a potential for Time Warner Cable (NYSE: TWC) to acquire other MSOs. The Liberty Media (Nasdaq: LMCA) chairman also floated a scenario in which Charter could buy Time Warner.
For years, industry observers have predicted that consolidation would eventually leave all U.S. cable systems controlled by Comcast (Nasdaq: CMCSA) and one other major MSO. But Rutledge's prediction is noteworthy, as Charter could be in a position to lead the next wave of consolidation with backing from Liberty and Malone, a cable pioneer who built TCI into the nation's biggest cable MSO. Consolidation would help operators fend off competition from satellite providers and telcos, and give operators scale that would make it less expensive to buy programming and hardware. Mergers would also make it more efficient for cable operators to sell advertising and operate systems with fewer employees.
The WSJ report contains more color about the events that preceded Liberty buying a 27.3 percent stake in Charter for $2.62 billion in February. Rutledge told the newspaper he was vacationing in the Caribbean when he received a call from Malone "out of the blue." Readers will also learn that the former Cablevision (NYSE: CVC) executive is a history buff who often wins a trivia contest that A&E Television Networks runs at an annual junket. "If we did it with teams, everyone would want Tom on his team," A&E CEO Abbe Raven told the publication.
- The Wall Street Journal has this story (sub. req.)
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