Charter 'desperate' for TWC, enters deal with no plan B, analyst says

Desperate to deliver the scale it has promised its investors for several years, Charter Communications enters the regulatory process for its proposed $56.7 billion purchase of Time Warner Cable with serious exposure and no "plan B" in the very possible event that federal regulators shoot the deal down. So says media analyst Richard Greenfield, who posted a rather critical analysis of the proposed merger.

TWC, he says, has "nothing to lose" with Charter paying a much higher price than it originally wanted, and agreeing to a $2 billion breakup fee. "If the Charter deal ultimately fails, Time Warner Cable will have spent another year improving operations without the normal 'focus' from investors, with Altice waiting in the wings for 'round three,'" Greenfield writes. Charter, however, is in a very different position, he contends. "You might initially say the $2 billion breakup fee is a sign of confidence in regulatory approval," Greenfield writes, "but this is more likely a sign of just how desperate Charter, and their largest shareholder, Liberty, is to achieving the industry scale they promised investors. With Altice starting to buy up smaller cable operators, Charter's only path to consolidating the industry among two key players is to complete the Time Warner/Bright House transaction. There simply is no plan B to achieving the scale [Charter president and CEO Tom Rutledge] predicted two years ago."