Minson: Scale ‘May Help’ Reduce Programming Costs

But TWC CFO Says No M&A Plans For Now

Additional scale ‘may help’ beat back rising programming costs, Time Warner Cable chief financial officer Arthur Minson told an industry audience Tuesday, but he added that the country’s second largest MSO has no immediate plans to tap the M&A market.

Time Warner cable has been the target of most of the M&A speculation in the industry since June, when  Liberty Media, which owns a 27% stake in Charter Communications, proposed combining those two MSOs. While TWC reportedly rebuffed those offers, it has still been the subject of much speculation, including possible mergers with Cox Communications and Cablevision Systems.

Minson avoided specifics, but reiterated the company’s position that it would look at every potential acquisition through the lens of whether a deal provides more shareholder returns than buying back its own stock. He added that the media giant’s earlier position that it considers maintaining its current leverage ratio of 3.25 times forward looking cash flow and investment grade credit rating remains a top priority.

Programming costs have been another hot-button issue for the industry, and TWC recently completed a particularly contentious retransmission consent battle with broadcaster CBS in New York, Los Angeles and Dallas. Again, Minson avoided details, but said at the end of the month-long blackout, TWC ended up in a “much, much better place,” than when it started negotiations.

 Minson said that programming costs are rising at a rate about 4 times that of inflation, but outside of regulatory reform, he sees an unclear path to “meaningful control” of content charges.