After numerous rebuffs, Charter Communications went straight to shareholders at Time Warner Cable on Monday with a new cash and stock offer of $61 billion in hopes it would pressure executives to rekindle negotiations.
The proxy battle threat however was dismissed immediately by Time Warner’s top executives, which said the new offer was too low for the second largest U.S. cable operator.
The merger battle that has been prolonged has up to now been a negotiated secret with executives from both flying to and from negotiations to hash out details of a deal. However, they came to a stalemate over a final price tag, which Time Warner Cable announced is over $30 too low per share.
The fiery negotiations revealed a scramble by the two biggest companies in the industry to gain greater footholds in a television business that is dramatically transforming.
Cable companies have lost many subscribers on television to free or less expensive services in Internet such as Netflix or Hulu. Last month, Time Warner Cable announced it lost over 215,000 subscribers during the fourth quarter of last year, but added more than 55,000 Internet subscribers.
Analysts have said that the more important value for today’s cable companies is their increasing broadband businesses. Charter said it wanted to expand to better compete against competitors. Time Warner and Comcast two cable giants have near monopolies on last mile pipes feeding Internet service to home in the U.S.
However, most of the revenue in the companies still is from subscribers for television. However, in combining forces Charter and Time Warner can negotiate better for lower rates in programming from such media companies as Viacom, Walt Disney and NBC Universal.
Charter had proposed a bid for cash and stock at close to market value of the Time Warner Cable stock, which closed on Monday at $132 per share.
Time Warner Cable serves the tri-state area of New York, but Charter, based in Connecticut serves more than 29 states including California and much of the South and Midwest.
On Monday, Time Warner Cable said its board rejected the most recent offer immediately.
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