Time Warner Cable Inc (TWC), Cablevision Systems Corporation (CVC): Hedge Fund Billionaire John Paulson Thinks These Companies Are Takeover Targets

Page 1 of 2

PAULSON & COHedge fund manager John Paulson has made a lot of money by correctly predicting the wave of mergers in the wireless industry. Paulson & Co. bought significant stakes in both Sprint Nextel Corporation (NYSE:S) and Leap Wireless International, Inc. (NASDAQ:LEAP) prior to their buyouts.

Now, Paulson sees another industry on the verge of consolidation: the cable business. Specifically, Paulson thinks that both Time Warner Cable Inc (NYSE:TWC) and Cablevision Systems Corporation (NYSE:CVC) could be acquired by Charter Communications, Inc. (NASDAQ:CHTR).

John Malone is the key

John Malone, the chairman of Liberty Media Corp (NASDAQ:LMCA), is the driving force behind any would-be consolidation. As I’ve written previously, Malone would like to see the industry reduce itself to fewer players, likely for the purpose of greater leverage when it comes to content cost negotiations.

But, will Malone be able to pull it off? Paulson seems to think so. At CNBC’s Delivering Alpha conference on Wednesday, he mentioned it as the next potential industry to consolidate.

And Paulson has put his money where his mouth is. As of his firm’s last filing, Paulson owned nearly 17 million shares of Cablevision Systems Corporation (NYSE:CVC) (up 37% from the prior filing). He owned no shares of Time Warner Cable Inc (NYSE:TWC), but interested investors should definitely check the next 13F for a stake in the cable provider.

Cablevision is a more likely target

Of course, it makes sense that Paulson owns a stake in Cablevision Systems Corporation (NYSE:CVC) and not Time Warner Cable Inc (NYSE:TWC). He argued that Cablevision Systems Corporation (NYSE:CVC) would be an easier takeover target due its smaller size. Cablevision Systems Corporation (NYSE:CVC) has a market cap of just over $5 billion, less than one-sixth of Time Warner’s $34 billion.

That poses a challenge for Charter Communications, Inc. (NASDAQ:CHTR), which has a market cap less than half of Time Warner Cable Inc (NYSE:TWC)’s. A deal could likely be done with enough leverage, but it would certainly be easier to buy the smaller Cablevision Systems Corporation (NYSE:CVC).

To be fair, there are still challenges with a Cablevision acquisition. Specifically, as Paulson noted, Cablevision is a family-owned business. Members of the Dolan family run and control the firm, if they don’t want to sell, a deal won’t get done.

Could Charter be acquired?

But, so far, all the reports have pointed to Time Warner as the company that’s about to get purchased. In fact, Bloomberg reported Friday that Charter Communications, Inc. (NASDAQ:CHTR) is working with Goldman Sachs to put together the financing for a deal.

But, could the purchase go the other way? As speculation of a forthcoming merger has intensified, the bonds of Time Warner Cable Inc (NYSE:TWC) have sold off. If Charter Communications, Inc. (NASDAQ:CHTR) purchased Time Warner, the resulting entity would be loaded with debt, perhaps as much as $60 billion.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!