(Updates with closing share prices in fifth paragraph.)
Sept. 25 (Bloomberg) -- Billionaire John Malone, the cable- industry pioneer and largest investor in Charter Communications Inc., is still aiming to convince Time Warner Cable Inc. that teaming up is in both companies’ best interests.
Consolidation makes sense because cable operators need to stay competitive with satellite-TV companies, Malone said in an interview at the Goldman Sachs Group Inc.’s Communacopia Conference in New York. So far, efforts to persuade Time Warner Cable to join forces with Charter have proved fruitless, according to people familiar with the discussions.
Malone’s dealings with Time Warner Cable are being handled by his holding company Liberty Media Corp., which is run by Chief Executive Officer Greg Maffei. The billionaire is letting Maffei manage any potential deal process, which Malone doesn’t expect to become hostile, he said.
“I’m not involved in those discussions,” said Malone, 72. “I’m an investor and a philosopher these days.”
Time Warner Cable shares fell 0.7 percent to $110.84 at the close in New York. Charter’s stock climbed 2.2 percent to $134.01, while Liberty Media rose 0.2 percent to $145.33.
Justin Venech, a spokesman for New York-based Time Warner Cable, declined to comment.
U.S. cable companies need to get bigger to improve their negotiating power with programmers such as Walt Disney Co. and CBS Corp., Malone said. CBS was blacked out on Time Warner Cable for a month between August and September because of a battle over content fees.
Liberty got its start as the cable-TV programming arm of Tele-Communications Inc., a company Malone ran for more than 25 years. Malone kept control of Liberty after selling TCI to AT&T Corp. in 1999. AT&T spun off Englewood, Colorado-based Liberty as a public company in 2001.
Malone has a net worth of $6.6 billion, making him the 61st-richest person in the U.S., according to the Bloomberg Billionaires index. He’s also the country’s largest private landowner, with 2.2 million acres of ranch and timber property in nine U.S. states.
Liberty Media acquired a 27 percent stake in Charter in May, marking Malone’s return to the U.S. cable industry. After completing the purchase, he vowed to transform the Stamford, Connecticut-based cable company into “a horizontal acquisition machine.”
Making the Case
Malone has set his sights on Time Warner Cable despite that company being a much larger business. Bloomberg News reported in June that Liberty and Charter were weighing how to structure a bid for Time Warner Cable, which has a market value of about $32 billion -- more than twice that of Charter.
“You’ve got to make the case to shareholders,” Malone said. “That’s the skill. That’s why Maffei gets the big bucks.”
Time Warner Cable Chief Financial Officer Artie Minson said yesterday that the company would consider taking on more debt if it came across an attractive enough merger or acquisition. While the cable provider doesn’t feel the need to get bigger, it would add more debt to its balance sheet under the right circumstances, Minson said at the Goldman Sachs event.
Gaining scale in the cable industry also could be done through joint ventures, Malone said. Larger companies with more clout could lower their costs, he said.
“You’d buy stuff cheaper and support technological innovation more easily,” Malone said.
--Editors: Nick Turner, Niamh Ring