John Malone wrangles runaway US cable mess
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Jonathan Guilford
NEW YORK, Sept 24 (Reuters Breakingviews) -The cable cowboy is cleaning up the ranch. John Malone, renowned for his bewilderingly complex financial engineering, has embraced an uncharacteristically simple solution for one struggling part of his empire. The mess at Liberty Broadband LBRDA.O would be partly tidied up by a mooted merger with internet provider Charter Communications CHTR.O. Even better for the media mogul, he gets to leave the rest of the dirty job to someone else.
Liberty Broadband is a mere shell, but one structured with three classes of stock and a slug of preferred shares. It owns a 26% stake in Charter, a 16.5% piece of shriveling data analysis outfit Comscore SCOR.O, and the entirety of Alaskan cable operator GCI. Malone has 49% voting control of Liberty Broadband, which appoints three directors at Charter.
Before disclosing talks around a potential merger on Monday, Liberty Broadband shares were trading below $60, or 43% less than the value of its Charter stake alone. Liberty has proposed terms to close the gap. Some $14 billion of Charter shares would still fetch a discount; add in net debt of nearly $4 billion, however, and it works out to a deal worth more than $2 billion. On that basis, GCI would be valued at nearly 7 times expected EBITDA this year, according to Visible Alpha, roughly the same multiple that Charter commands.
Even then, it would represent a collapse from three years ago, when Charter’s multiple was higher than 11 times. With customer growth stalling, profit expansion is expected to wane. Mobile network operators like T-Mobile TMUS.O are horning in on its broadband business with fixed wireless alternatives. Worse, video revenue declined 6% in 2023 as streaming services abound.
It might have seemed unlikely back in 2021, when the decline of linear TV was not yet so clearly precipitous. Charter, like rival Comcast CMCSA.O, was rolling out its own version of cellphone service. Cable operators now account for 5% of all wireless phone subscriptions, according to analysts at MoffettNathanson.
The mobile companies have responded. T-Mobile recently raised its fixed wireless target to 12 million subscribers. New technological developments also could dramatically increase its capacity, TD Cowen analysts reckon.
Charter can play hardball with TV providers, as recently occurred with Warner Bros Discovery WBD.O, to keep hold of its subscribers. And cable is, technically, a superior internet service to wireless. Clawing back to growth, however, is a tall order, evidenced partly by Malone’s willingness to unwind Liberty. He would ride off with only about 1% of the combined company.
Follow @JMAGuilford on X
CONTEXT NEWS
Holding company Liberty Broadband said on Sept. 23 that it had received a merger proposal from cable operator Charter Communications, and that it had sent a counterbid with terms for an all-stock transaction.
Liberty Broadband owns a 26% stake in Charter, a 16.5% stake in media data analysis company Comscore, and all of Alaska-based cable provider GCI.
Under the terms of Liberty Broadband’s offer, its stockholders would receive 0.29 shares of Charter for each of their shares.
Cable operators had a rough few years https://reut.rs/3XVnWJ6
Editing by Jeffrey Goldfarb and Pranav Kiran
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
