Charter Communications and Comcast may battle for Time Warner Cable

A battle for Time Warner Cable, the nation’s fourth-largest pay TV distributor, may be on the horizon.

Looking to resist a takeover attempt by Charter Communications, Time Warner Cable has reached out to Comcast Corp., the nation’s largest operator, about a possible merger, people familiar with the matter said.

Charter has made no secret of its desire to get bigger. Charter counts among its investors Liberty Media, whose chairman, John Malone, is a cable mogul who has been advocating for greater consolidation in the industry.

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While Charter has made no official offer, Time Warner Cable has privately indicated to Charter that it is not interested in a deal. Charter, with a market capitalization of $13 billion and about 4 million customers, is much smaller than Time Warner Cable, which has a market cap of about $35 billion and more than 11 million subscribers.

But that hasn’t slowed Charter down. The Connecticut-based cable company is in advanced talks with three banks about financing a run at Time Warner Cable, the Wall Street Journal reported Thursday.

Time Warner Cable reached out to Comcast recently hoping the Philadelphia-based operator could be a white knight and derail Charter’s efforts. For Comcast, which has more than 21 million subscribers around the country already, a deal with Time Warner Cable would give it millions of customers in some of the nation’s biggest markets, including Los Angeles, where it is the largest cable provider, and New York City. It would create a cable juggernaut that could better compete against satellite broadcasters DirecTV and Dish Network.

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There would also be programming synergies in a Comcast-Time Warner Cable deal. Comcast owns several regional sports networks and Time Warner Cable operates a Lakers channel here and next year will launch a new network that will carry the Dodgers.

There are no Federal Communications Commission rules that would prohibit a Comcast-Time Warner Cable marriage. However, such a deal would still be likely to draw a lot of scrutiny from regulators and lawmakers and protests from media watchdogs coming so soon after Comcast’s acquisition of NBCUniversal, which made it one of the biggest owners of entertainment content.

The speculation about Time Warner Cable has some analysts predicting even more consolidation in the industry. Some distributors feel that by getting bigger they will have more leverage in negotiating with large programmers such as Viacom and 21st Century Fox. Time Warner Cable recently reported a loss of 300,000 subscribers after it went through a lengthy fight with CBS over a new distribution contract.

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Time Warner Cable stock jumped 8% to $130.67 in Friday trading while Charter was up about 2% to $128.88. Comcast stock was up about 3% to $48.81.

A Charter spokesman did not return a request for comment and Time Warner Cable declined to comment.