Time Warner Cable went on the offensive Wednesday in its ongoing war of words with Charter Communications, launching a presentation on its web site that details why it believes it is worth $160 per share and countering some of the latter’s claims of operational failure.
Charter launched a $132.50 per share unsolicited bid for TWC on Jan. 13, an offer that Time Warner Cable rejected as “grossly inadequate.” Time Warner Cable stated that although it wasn’t for sale, it would accept an offer of $160 per share.
On Tuesday, Charter held a conference call with analysts to discuss the TWC proposal, with chief operating officer John Bickham calling his former employer’s operational strategy “failed.”
On its web site, TWC points out that the $160 per share price works out to be about 8 times forward looking cash flow and noted that the “only true comparable deal from a scale perspective” – Comcast’s 2002 acquisition of AT&T Broadband – was valued at 21 times cash flow.
“Charter has made a number of claims in its public comments about TWC and the Charter proposal that we believe reflect a fundamental lack of understanding of our operations and strategy,” TWC said on the website. “We will address these claims in due course. However, none of what Charter has claimed changes the simple fact that its proposal is grossly inadequate.
TWC claimed that it is the only pure-play cable operator of scale in the industry – Comcast, which owns programmer NBC Universal is vertically integrated – and also countered Charter’s claims that its plant is antiquated – adding that its IP video product is the most advanced linear product in the industry and offers up to 300 channels on multiple platforms. TWC also averages 179 HD channels per market, with some markets like New York City having as many as 250 HD channels. TWC also refuted Charter’s claims that by failing to go all-digital with its systems – something Charter expects to complete at the end of this year – TWC has failed to offer robust data speeds. TWC has completed the all-digital conversion in New York City and is in the process of converting other markets. And the operator offers 100 Megabit per second high-speed data service in several markets and is in the process of increasing standard HSD speeds to 50Mbps and top speeds to 300Mbps in 2014.