Cable pioneer and Liberty Media chairman John Malone believes there needs to be a wave of consolidation among large cable operators in order to achieve economies of scale.
Malone, who was interviewed by a Reuter’s reporter during a conference in Sun Valley, Idaho, pointed at Time Warner Cable as a potential buyer. Malone has been in the news of late after saying that Charter Communications, which Liberty Media has a 27 percent stake in, could be in play for making “horizontal” acquisitions, which reportedly could include Time Warner Cable and Cablevision.
Reuters reported that Malone’s recent offer to buy Time Warner Cable was rebuffed by its management, but Malone said Time Warner Cable “should be a consolidator because they’re the second biggest” cable operator in the nation.
Malone’s Liberty Global owns a 4.8 percent stake in DirecTV and a small stake in Time Warner Cable that dates back to when Time Warner Cable was part of Time Warner. Cox Communications is the third-largest cable operator in the nation, followed by, respectively, Charter Communications and Cablevision.
Malone advocated horizontal mergers in the Reuters story since “buying the guy next door makes the most sense,” which would lend weight to the long-standing rumor that Time Warner Cable has its eye on Cablevision’s tri-state area footprint. “Edge-out” acquisitions have been a staple of past cable operator consolidations.
Joint ventures between cable operators could also serve as means to achieve the economies of scale that are currently enjoyed by Comcast, according to Malone.
Time Warner Cable has also contacted Cox Communications and Cablevision in regards to creating larger clusters in major markets, according to Reuters.