Charter Soars on Bright House Report

Could Acquire Operator For As Much As $12B
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Charter Communications is reportedly in talks to acquire mid-sized cable operator Bright House Networks in an all-stock deal worth as much as $12 billion that would bring an additional 2.5 million customers in Florida, Alabama, Michigan, Indiana and California into the Charter fold.

Charter shares soared on the possibility of a deal – the stock rose as high as $196 per share (up 7.3%, or $13.39 each) before closing March 12 at $193.46 each, up 5.9% or $10.85 per share.

Charter agreed last year to a series of sales, swaps and spin-offs with Comcast-TWC that would effectively double the size of its footprint. But those deals aren’t set to occur until after the Comcast-TWC deal is completed. But since that deal was first struck the odds of its completion have dipped considerably, with some analysts pegging it at even money the deal is not approved.

Bloomberg News first reported that Charter and Bright House were in talks. The report, citing unnamed sources, said a deal likely wouldn’t be consummated until after the Comcast-Time Warner Cable deal was completed.

“Since the Time Warner Cable/Comcast transaction was announced, there has been some speculation regarding Bright House,” Bright House said in a statement. “While we have had conversations with many parties about this transaction, we do not have an agreement with anyone regarding future plans for Bright House.”

A purchase of Bright House would make sense, mainly because it has been essentially left out of the Comcast deal. Bright House was carved out of AOL Time Warner in 2002, as part of the dismantling of the Time Warner Entertainment-Advance/Newhouse partnership with the cable giant. As part of its earlier agreement, Advance/Newhouse was allowed to pick from three buckets of subscribers – one in Upstate New York, one in Florida and one in the Carolinas. Newhouse picked the Florida systems, which included operations in TWC’s Tampa and Orlando, Fla., markets; Birmingham, Ala.; Indianapolis; Bakersfield, Calif.; and Detroit. In addition, the operations, which were renamed Bright House Networks in 2003, also were able to purchase programming under TWC’s content deals. When the Comcast-TWC deal was announced in February, there was no mention of whether Bright House would be included in that deal or whether it would retain the programming relationship.

Charter officials declined comment. Bright House officials did not respond to requests for comment.

Bright House had been run by chairman Bob Miron, a long-time cable executive, who retired in 2010. Since then Bright House has been led by his son Steve Miron (CEO) and daughter Nomi Bergman (president), both well-respected cable executives and active in industry affairs.

Sources familiar with the company have said that Bright House executives were basically in the dark concerning their status after the Comcast-TWC merger, so the notion that Charter would approach them about a deal in the interim makes sense. However, those sources said that if the Comcast-TWC deal does not win approval, all bets are off.

“If Comcast-TWC doesn’t get approval, then Charter goes after TWC and we’re back to square one,” said one member of the cable financial community.