Market Overview

Liberty Media Expected to Buy 25% of Charter Communications

Liberty Media (NASDAQ: LMCA) (NASDAQ: LMCB) is reportedly in talks with Charter Communications (NASDAQ: CHTR) to acquire 25 percent of the firm.

According to The Wall Street Journal, the deal would be worth nearly $2.5 billion.

If this report proves to be true, it will be Liberty Media's first major acquisition since it spun off Starz (NASDAQ: STRZA) (NASDAQ: STRZB) last year.

In 2008, Charter was the fifth most successful cable company in America. The company has continued to grow, rising from 3.3 million subscribers to four million subscribers as of March 2012. Despite its growth, The Wall Street Journal said that it is now the eighth biggest pay-TV provider.

Shares of Charter are up more than seven percent today. The company has been growing steadily over the last three months, rising 21 percent.

Starz has performed even better, rising more than 58 percent since December. The stock is currently down less than one percent.

Liberty Media has not been performing nearly as well. The stock has gained less than two percent over the last three months. It is currently trading down roughly one percent.

Analysts have had a relatively positive outlook on Charter. Earlier today, ISI Group raised its price target on Charter from $88 to $100.

Jefferies and Pivotal Research Group recently raised price targets as well.

Last fall Charter faced a battle with one of its content partners, CBS (NYSE: CBS), after the network threatened to pull its channels from the cable provider. The two companies settled their differences and announced a new agreement in January. Under the new terms, Charter will now be able to stream online content from CBS and Showtime.

By acquiring a stake in Charter, Liberty Media chairman John Malone will gain a piece of his own heritage.

Before Liberty Media, Malone controlled Tele-Communications, Inc. TCI was once the largest cable provider in the United States. The firm was sold to AT&T in 1998 -- several years after a planned merger with Bell Atlantic fell apart.

In 2001, Charter purchased some of TCI's cable assets from AT&T (NYSE: T). Thus, by acquiring a piece of Charter, Malone stands to gain access to some of the technology he lost.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis@benzingapro.com. Follow him @LouisBedigianBZ

Posted-In: AT&T Bell Atlantic Charter CommunicationsNews Rumors M&A Success Stories Tech Best of Benzinga

 

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