Liberty CEO Says Any Charter-Time Warner Deal Would Be 'Friendly'

Liberty Broadband Corp. Chief Executive Greg Maffei said any deal its part-owned cable affiliate Charter Communications Inc. pursues with Time Warner Cable Inc. would be a "friendly transaction," after its hostile approach more than a year ago backfired.

On an earnings call with analysts Friday, Mr. Maffei spoke up about Charter's potential consolidation ambitions publicly for the first time since Comcast Corp. abandoned its merger with Time Warner Cable last month.

Mr. Maffei said a deal between Charter and Time Warner Cable would look for "the best of breed in both management teams" and try to "drive an improved experience both for consumers and shareholders going forward." The tone starkly contrasts with the hostile approach Charter took more than a year ago, when it argued that its operating team, led by Charter CEO Tom Rutledge, was superior to the TWC management led by CEO Rob Marcus. Comcast swooped in last year to strike a deal with Time Warner Cable, scuttling Charter's aggressive campaign.

In any transaction, Mr. Maffei said Liberty wants to maintain its 25% voting stake in Charter. Liberty has a "wide range" of ways to raise capital to maintain the stake, if needed, Mr. Maffei said, adding that the company has $700 million in cash.

Mr. Maffei said "many" potential partners have expressed interest in investing alongside Liberty if Charter needs to raise more capital. Buying Time Warner Cable would require Charter to borrow a significant amount of money, but equity partners could help reduce the resulting leverage of the combined company.

A bigger question is whether regulators would sign off on cable consolidation. Mr. Maffei addressed the regulatory landscape that the cable industry has faced over the past year, as the Federal Communications Commission has opted to impose stringent new broadband regulations and prepared to challenge the Comcast-Time Warner Cable merger.

Some people close to the current deal talks--which amounts to a love triangle between Time Warner Cable, Charter and the smaller closely held operator Bright House Networks LLC--have said it remains a question of how kindly regulators would look upon a three-way cable merger of that size.

Mr. Maffei acknowledged that regulators may have their fears about another cable merger, especially regarding broadband market power. But he expressed hope that regulators would view Charter favorably since it is already invested in boosting its broadband speeds to a minimum of 60 megabits per second.

"I think we should be able to, given the relatively small size of Charter today, convince them that is not an issue," Mr. Maffei said. "But certainly people would be judicious and thoughtful before any deal went forward."

Building the best experience for consumers requires technology investments and "large dollars and large scale," Mr. Maffei said. Cable consolidation "will surely add to that" and help the cable industry combat the size of big content companies and potential technology competitors, he said.

Some people familiar with Charter's thinking have noted that a three-way cable combination would still be smaller than Comcast's size today, and may not invite the same type of regulatory scrutiny since none of those operators also own an entertainment company like Comcast's NBCUniversal.

Write to Shalini Ramachandran at [e-mail]

Access Investor Kit for Charter Communications, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US16117M3051

Access Investor Kit for Comcast Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US20030N1019

Access Investor Kit for Comcast Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US20030N2009

Access Investor Kit for Time Warner Cable, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US88732J2078

Subscribe to WSJ: http://online.wsj.com?mod=djnwires