High expectations for cable mergers are making it...
High expectations for cable mergers are making it harder for those mergers to happen, said MoffetNathanson Research analyst Craig Moffett in an email to investors Friday. “These inflated expectations have boosted the stock prices not only of potential acquirees (Time…
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Warner Cable) but also of potential acquirers (Charter) paradoxically making deals harder to strike,” said Moffett. Liberty Media CEO John Malone’s buy of 27 percent of Charter and his endorsement of cable consolidation triggered a “run-up” in cable shares that has since leveled off, said Moffett. “But none have returned to anything close to their unadjusted levels, suggesting that expectations remain high for deals to materialize.” The increased stock prices from merger and acquisition speculation have “obscured” other cable trends -- such as weakening growth in broadband -- that might otherwise have led the stocks to fall, said Moffett. Since the stock prices of both TWC and Charter have risen because of merger talk, the increase hasn’t made it any easier for Charter to acquire TWC. Overly optimistic expectations similarly make deals involving Cablevision or Cox unlikely to happen soon, said Moffett. “A more sober assessment of potential merger synergies is likely a prerequisite for getting deals across the finish line."