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Time Warner Cable Q1 Earnings Beat Estimates With Strength In Broadband And Business Services

By | Thursday April 24, 2014 @ 3:53am PDT

Time Warner Super Bowl 2014Price hikes for Internet and the company’s growing attention to business customers saved the day for Time Warner Cable in Q1 as its video subscriptions fell and it grappled with rising costs for programming and its planned merger with Comcast. TWC shares are up about 2% pre-market after the No. 2 cable operator reported net income of $479M, +19.5% vs the period last year, on revenues of $5.58B, +2%. Analysts expected the top line to come in higher at $5.64B. After factoring out one-time costs, including merger-related expenses, earnings came in at $1.78 a share, a dime ahead of the consensus forecast. The period included $62M in expenses tied to Comcast’s $42B takeover effort, including $29M in “employee retention costs” and $33M in advisory and legal fees. Programming costs rose 2.9% to $1.3B, including costs associated with TWC’s LA regional sports channels for the Lakers and Dodgers. But with 11.16M video subs at the end of March — down 748,000 vs last year and -34,000 from the end of December — the average monthly programming costs per residential sub increased 10.2% to $37.69. (By contrast, Comcast eeked out a small increase in video subs in Q1.)

Related: Time Warner Cable Chief Says Subs Coming Over For Dodgers Channel

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Comcast To Netflix: “Here Are The Facts” About Time Warner Cable Merger

By | Monday April 21, 2014 @ 5:08pm PDT

Comcast Time Warner Cable merger logoThe cabler has fired back at the DVD/streaming service, which earlier today slammed the Comcast-Time Warner Cable merger as anti-competitive. In its response, Comcast said Netflix‘s stance “is based on inaccurate claims and arguments.” Here’s the company’s full reply from Jennifer Khoury, SVP Corporate & Digital Communications:

Netflix’s opposition to our Time Warner Cable transaction is based on inaccurate claims and arguments. There has been no company that has had a stronger netflix_logo2commitment to openness of the Internet than Comcast and we are the only ISP in the country that is currently legally bound by the FCC’s vacated net neutrality rules. In fact, one of the many benefits of our proposed transaction with Time Warner Cable will be the extension of Net Neutrality protections to millions of additional Americans. Here are the facts:

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UPDATE: Senate Committee Expresses Skepticsm Over Comcast-Time Warner Cable Merger

Comcast-Time-Warner-Cable-logos__140213130107-150x150__140213191744UPDATED: The Senate Judiciary Committee hearing into Comcast’s $45.2B acquisition of Time Warner Cable wrapped after three hours today. And Comcast EVP David Cohen upheld his reputation as a lobbying Jedi Master, although critics of the deal scored by pointing out how it could lead to higher prices and problems for independent programmers. Senate Judiciary Cmte Holds Hearing On Comcast-Time Warner Cable MergerCohen started off strong in his opening statement: He cast his company as the embodiment of the American Dream — and announced that it has more than 1M WiFi hot spots with plans to boost their transmission speeds. “This is the 13th time we’ve increased Internet speeds in 12 years,” he says. Public Knowledge’s Gene Kimmelman — a former Justice Department antitrust lawyer — hit back. He charged that it would be “anathema to Comcast” if programmers want to offer content directly to consumers via the Internet for a low cost. The cable giant is committed to “charging top dollar” and, as owner of NBCUniversal, would be like an octopus with tentacles “each capable of squeezing innovation.”

In regard to pricing, Cohen said, in response to a question from committee Chairman Patrick Leahy (D-Vt.), that “there is nothing in this transaction that will make anyone’s bills go up….Consumers today are in the driver’s seat.” He added later that programming costs have appreciated 98% over the last decade. Later he told Sen. Al Franken (D-Minn.) — who wanted to know whether shareholders would demand higher prices — us-senate-logo_20110526180215that “we have made it a point of significant discussion about our need to continue to invest to compete better with national and global competitors.” Kimmelman responded that Comcast is in the driver’s seat in the highly concentrated video and broadband markets. “The squeeze will come from Comcast,” he says. “It’s logical. They want to save money….and it could lead to significant price increases for others.”

Franken had Cohen against the ropes in a discussion about Comcast’s efforts to push customers to buy multiple or upgraded products. “When you train [sales]people to upsell, you’re not training them to sell the stand-alone product.” Cohen said that “we are allowed to train people to upsell,” but sales reps also “have to be aware of the stand-alone product” and provide it on request. Read More »

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Charter And Others Prepare To Challenge Time Warner Cable At Its Annual Meeting

It’s not WrestleMania, but Time Warner Cable shareholders can expect more excitement than usual at their annual meeting this year: time-warner-cable-logoThe company’s preliminary proxy, out this morning, includes proposals from Charter Communications and other investors  that could create problems for TWC management as it tries to sell the No. 2 cable giant to No. 1 Comcast.

Charter — which was the runner up in the bidding contest, but hasn’t given up — wants to change the by-laws to fix the size of the TWC board at 13 instead of allowing directors to change it when they want. Charter plans to propose its own TWC board slate, and no doubt wants to ensure that directors don’t boost the size of the body to dilute the impact if the challengers win. TWC naturally urges shareholders to reject Charter’s candidates, and the proposal. “Recruiting qualified candidates is a challenging and time-consuming process, and the Board of Directors believes that it is in the best interests of the Company’s stockholders for the Board to retain the flexibility to either increase its size if a highly-qualified candidate becomes available or to decrease its size if a director declines to seek reelection or for other reasons,” the company says.

Charter also wants TWC investors to support a change in the by-laws to repeal any changes made without shareholder support after July 26, 2012. Here, too, TWC’s board urges a “no” vote saying that the resolution “represents no … Read More »

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Comcast Sets Stage For Testy Senate Hearing, Telling FCC That Time Warner Cable Acquisition Serves Public

By | Tuesday April 8, 2014 @ 8:09am PDT

Comcast Time Warner Cable logos

UPDATE, 10:06 AM: Comcast EVP David Cohen just fleshed out in a press call some of his company’s arguments for the Time Warner Cable deal. To those who say the combined company would be too big he says that “in this particular case we think big is good” — it would be better able to offer new and improved services. And if Comcast is wrong “it doesn’t make any difference really because, as a customer, you’ll have the exact number of choices as you had before the transaction.” The only change: With Comcast instead of TWC as a broadband or video provider consumers’ “choice will be better.” He adds that Comcast is focused “like a laser” on improving the customer experience. (Sound familiar?)

PREVIOUS, 8:09 AM: This is the kind of thing you’d expect the cable giant to assert in a regulatory filing — and that will be roundly contested, including tomorrow at a Senate Judiciary Committee hearing on the $45.2B deal. Content companies that might oppose the deal “have strong relationships” with the committee, which oversees copyright matters, Guggenheim Securities’ Paul Gallant says. What’s more, the committee includes two strong critics of media consolidation: Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.).

SenateJudiciaryCommitteeComcast detailed its public interest arguments in a 175-page document delivered to the FCC this morning. It “lays out in considerable detail how Comcast and TWC are better together for millions of customers and businesses, describing the exciting enhanced services and other concrete consumer benefits that will be available because of the transaction,” Comcast EVP David Cohen says in a blog post. In addition to cable and Internet services, Comcast owns NBCUniversal.

The company indirectly takes issue with Netflix CEO Reed Hastings’ claim that Comcast imposed an “indirect tax” on the streaming video company in a recent deal: Netflix agreed to pay Comcast directly to access its broadband lines in a way that will deliver the best possible transmissions to its customers. Comcast says it has “no economic incentive” to hit up so-called edge providers because its customers “place a high premium on being able to access any Internet content they want.” Comcast would have about 30M broadband customers after acquiring TWC. Read More »

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Time Warner Cable, DirecTV In Stalemate Over Dodgers Channel

By | Friday April 4, 2014 @ 12:29pm PDT

SportsNet LA logoDirecTV subscribers apparently will not be watching any Dodgers games in the near future. Talks have broken down with the satellite TV provider and Time Warner Cable, which handles distribution of the MLB team’s new SportsNet LA channel, according to TWC.

Maureen Huff, Time Warner Cable vice president of public relations, told Deadline, “We can confirm that DirecTV has left the negotiating table. We were advised by their negotiating team that they would not counter our last proposal and that conversations were at an end. We are eager for all consumers in the Dodgers footprint to have access to SNLA and we hope that other providers will come on board quickly so that the frustrated DirecTV consumers have alternative options throughout the region.  We will continue to work tirelessly to make that happen. And, in the event that DirecTV would like to re-engage discussions, we stand at the ready to do so 24×7″. Read More »

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Comcast Says It May Give $2.5B To Shareholders If They Approve Time Warner Cable Deal: Report

By | Monday March 31, 2014 @ 12:22pm PDT

Comcast-Time-Warner-Cable-logos__140213130107-150x150__140213191744This is sure to hurt Charter Communications’ already long-shot effort to persuade Time Warner Cable shareholders to reject the $45B sale to Comcast. The cable giant plans to add $2.5B in share repurchases to the current plan to buy back $3B in 2014, Comcast CFO Michael Angelakis told Bloomberg. He noted that when the deal with TWC was announced, the No. 2 cable company cancelled its own planned $2.5B stock repurchase. “We’d evaluate whether we’d want to accelerate [Comcast's] plan and increase it above $3 billion, based on the fact that Time Warner Cable had terminated their buyback plan,” he told the news service. His company could finance the stock repurchase from the cash it expects to collect after a merger when it sells systems with at least 3M subscribers, bringing its total to about 30M. Comcast and TWC’s stock prices each declined more than 5% over the last few weeks, but rebounded today. TWC’s +1.4% in afternoon trading and Comcast is +1.3%.

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Charter Asks Time Warner Cable Investors To Reject Comcast Acquisition

Charter logoReturned today from the CinemaCon confab, so I’m just now getting a chance to catch up with Charter Communications‘ astonishing SEC filing that urges Time Warner Cable shareholders to support its $37B Comcast-Time-Warner-Cable-logos__140213130107-150x150__140213191744cash-and-stock bid over Comcast’s $45.2B all-stock offer. I don’t know if there’s enough in the proxy to derail the Comcast-TWC deal. But it’s sure to create some turbulence — if nothing else by giving ammo to class action lawyers who want to argue that the TWC board failed to faithfully represent shareholders’ interests when it stiff-armed Charter and embraced Comcast.

Related: Fears Of Government Rejection Hung Over Comcast’s Deal Talks With Time Warner Cable: Proxy

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WGA Urges FCC to Block Comcast- Time Warner Cable Merger

By | Sunday March 23, 2014 @ 6:54am PDT

WGABy David Robb, Special To Deadline

RELATED: WGA West & WGA East Slam Merger Of Comcast And Time Warner Cable

EXCLUSIVE: The Writers Guild of America has offered a chilling picture of the future of television to the Federal Communications Commission in a bid to block the proposed Comcast-Time Warner Cable merger.

In February, Comcast agreed to buy Time Warner Cable for $45 billion in a deal that would combine the two largest cable companies in the United States. The deal must still be approved by the FCC.

“The FCC should deny the proposed merger,” the WGA said in a brief filed with the FCC on Friday, noting that the merged entity “would control almost 30%” of the cable and satellite TV market.

Such a merger, the guild argued, “would give too much power over broadcast and cable networks. Comcast’s ability to blackout one-third of television viewers would force networks to agree to terms and rates set by Comcast, harming investment in programming.”

COMCASTA merged Comcast-Time Warner would also control approximately 30% of the broadband Internet market, the guild said, “giving the company the means to limit competition from online video providers like Netflix and Amazon. Comcast has already demonstrated its inclination for anti-competitive behavior by exempting its own streaming service from data caps when watched on an Xbox, while applying data caps to competing services.”

In economic terms, the guild told … Read More »

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Fears Of Government Rejection Hung Over Comcast’s Deal Talks With Time Warner Cable: Proxy

By | Thursday March 20, 2014 @ 8:10am PDT

That’s one of the nuggets that connoisseurs of corporate deals will find interesting in the proxy that Comcast and Time Warner Cable filed with the SEC this morning. Comcast-Time-Warner-Cable-logos__140213130107-150x150__140213191744Among other things, the document gives the public a first look — albeit a bloodless one — at the behind-the-scenes dramas that led to the $45.2B agreement. The proxy says that Charter Communications and its largest shareholder, Liberty Media, began to talk to TWC about their interest in acquiring the No. 2 cable operator on May 22, 2013.  TWC execs considered it too risky and began to talk to Comcast about an alternative arrangement in “mid-2013″ with legal reps meeting on June 27. On October 15  Comcast CEO Brian Roberts “indicated that Comcast might be interested in exploring a merger of Comcast and TWC” but also said that he had discussed the possibility of helping Charter. Conversations went back and forth until a series of  secret meetings on January 7 at International CES in Las Vegas: Charter CEO Tom Rutledge told Marcus that he was about to go public with his offer. Shortly afterward Marcus met with Roberts to bring him up to date. Later in the week Roberts said his conversations with Charter had “intensified.” Comcast management told its board, on January 12, that it preferred a collaboration with Charter. But Charter and Comcast couldn’t agree on terms, and broke off their talks on February 4. Read More »

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Time Warner Cable CEO Could Receive $80M Golden Parachute From Comcast Deal

By | Thursday March 20, 2014 @ 7:17am PDT

twcable1Time Warner Cable shareholders will have an opportunity to register their opinions about the golden parachute terms outlined this morning in the preliminary proxy for the proposed $45.2B merger sale to Comcast. rob_marcus_time_warner_cableBut the company can ignore the advisory vote about the terms that, if the deal goes through, could provide TWC chief Rob Marcus with a nearly $80M golden parachute that includes $20.5M in cash, $56.5M in equity, $400,000 in benefits, and $2.5M in a supplemental bonus. The document warns that the amounts reflect the values of the packages as of March 12 and, since stock prices could change, include totals “that may or may not actually occur.” But the amounts also could be higher: For example, the tally reflects a $958,909 target bonus for Marcus pro rated to assume he left on March 12. The exec, who rose to the top job in January, has an annual target of $5M. The proxy says that Marcus and other TWC execs likely can say that they have “good reason” to resign after the deal “and collect the above severance benefits.” The 2010 Dodd-Frank Act entitles shareholders to vote on an advisory basis on golden parachutes. The companies urge TWC stock owners to support the terms, but provide no rationale for doing so.  They add that since the vote “will not be binding on either TWC or Read More »

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State Attorneys General Plan To Scrutinize Comcast-Time Warner Cable Deal: Report

By | Wednesday March 19, 2014 @ 8:20am PDT

Comcast-Time-Warner-Cable-logos__140213130107-150x150__140213191744This typically happens in big cable system mergers, but still adds to the pressure on Comcast to make public interest concessions to win approval for its $45.2B acquisition of Time Warner Cable. Florida and Indiana are among the states confirming that they will investigate issues in the deal, Reuters reportsFlorida’s AG office told the news service that it is “part of a multi-state group” helping the Justice Department to investigate potential antitrust problems with the transactions. The AGs will mostly focus on issues involving broadband, not cable TV, an unidentified source said. It wasn’t clear whether Indiana was part of that group, but its AG office said that it will look the deal’s “potential impact in Indiana.” Thus far execs have mostly spoken publicly to friendly investor gatherings. They likely will face more sharp-edged questions April 2 when the Senate Judiciary Committee holds a hearing to explore the deal’s impact on consumers. 

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UPDATE: City Of LA Suing Time Warner Cable For Millions In Franchise Fees

By | Friday March 14, 2014 @ 11:54am PDT

DEADLINE_LEGAL_patten_100UPDATE, 11:54 AM: Time Warner Cable has responded to the suit: “As a major job creator, tax contributor and service provider in the City of Los Angeles, Time Warner Cable is an active and responsible corporate citizen in the City of Los Angeles. We are disappointed the City has chosen to bring this action, which we strongly believe is without merit. It will now be resolved through the legal process.”

PREVIOUS, 11:26 AM: Time Warner Cable is about to learn what happens when City HallTWCLawsuit takes you on. L.A. City Attorney Mike Feuer said today that he’s going after the cable giant in a nearly $10 million lawsuit (read it here) alleging that TWC has refused to pay fees owed the city since 2011 while at the same time raking in billions in revenue. ”Time Warner pocketed the money from its subscribers and didn’t turn it over to the City of LA,” Feuer said during a press conference this morning downtown. “That money would have funded 100 police officers and miles of sidewalk repair,” he said. The city is demanding Time Warner Cable pay up on $9,697,896 owed – $2,512,490 in 2008 and 2009 Time Warner Super Bowl 2014franchise and Public, Educational, Government use (PEG) fees, plus $7,185,406 in 2010 and 2011 franchise and PEG fees. Feuer added that the suit, filed this morning in … Read More »

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Time Warner Cable CEO Expects Last Minute Deals To Carry L.A. Dodgers

So far Time Warner Cable and closely allied Bright House Networks are the only pay TV distributors that have agreed to carry TWC’s new SportsNet LA which will feature the Dodgers. SportsNet LA logoBut TWC chief Rob Marcus says he isn’t worried: “Not surprisingly all of the action happens on the eve of opening day,” he told the Deutsche Bank Annual Media, Internet & Telecom Conference this morning. “It’s the typical game that occurs.” He assured investors, though, that TWC won’t have to shell out big bucks if others play by different rules. “Our license fee to the Dodgers is not driven by subscriber volume,” he says. The deal that TWC signed last year requires it to pay $8.5B over a 25 year period to offer the channel and handle distribution.

As you might expect, most of the questions Marcus fielded dealt with Comcast’s $45.2B plan to buy his company. He disputed the claim that the combination of the two largest cable companies would give Comcast too much leverage in negotiations with programmers. “I find that whole line to be ironic given the experience we’ve had over the last dozen years or so” — including the black eye TWC ended up with last year when it tangled with CBS in a carriage contract dispute. Some small cable operators worry that programmers that have to cut prices for Comcast will make up for Read More »

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Al Franken Blasts Comcast/Time Warner Cable Merger On ‘CBS This Morning’: Video

By | Monday March 10, 2014 @ 11:30am PDT

image003[1]The most camera-ready opponent of Comcast’s merger plans with Time Warner Cable  — who, ironically, owes his big break to Comcast-owned NBC — went on CBS This Morning to again blast the proposed merger, saying “consumers will end up paying more, there will be less competition, there will be less innovation and, worse, even worse service.” Sen. Al Franken (D-Minn.) this morning said he sent out an email to his constituents to get their “feelings about what kind of service they get from Comcast” and whether they think the proposed deal “will be good.” “I got 60,000 responses, and believe me, people don’t like their service from Comcast, and they don’t think this deal is going to help them,” said Franken — who, before entering politics in a big way was a writer and performer on the now Comcast-owned NBC’s Saturday Night Live from its launch in the mid 1970s until 1980, returning in 1985 for another decade. Watch his appearance here:

Franken matters because he sits on the Senate Judiciary Committee which, later this month, will hold hearings on the reported $45 billion deal that would give Comcast 30 million subscribers in 43 of the nation’s top 50 markets — aka about 30% of pay TV customers. Franken reminded CBS This Morning anchors this morning he hadn’t been any too happy about the Comcast/NBCU merger either. Read More »

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Time Warner Cable Exec Says Sub Trends Are Improving, But Video Still Falls

By | Wednesday March 5, 2014 @ 11:02am PST

The No. 2 cable company is seeing the “best subscriber performance in the residential side that we’ve had in a 5 year period,” with total relationships up by 75,000 in the first two months of this year, CFO Artie Minson told the Morgan Stanley Technology, Media & Telecom Conference today. Time Warner Super Bowl 2014But all of the increases are in broadband, phone and business services: Residential video subscriptions are down by about 50,000 so far. The company lost 217,000 in the last three months of 2013 to end the year with 11.4M. Still, the exec says there’s a silver lining with net additions over the last four weeks. “As we head into March we’re excited about the positive momentum.” Minson warned that the current quarter may be “the low point of the year” for revenue growth in comparison with the same periods in 2013. While the company works to promote its $45.2B sale to Comcast, Time Warner Cable is going “full steam ahead on all of [its product enhancement] initiatives.” TWC hopes to win back market share by hitting customers with “more modest rate increases” after a period when “we were getting too much of the revenue growth from the rate side.” Minson says he’s not concerned about the growing talk about an online pay TV service, possibly including one from Dish Network with programming rights it just secured from Disney. “I’m not sure it is a business unless Read More »

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Time Warner Cable To Offer Epix Beginning March 18

By | Monday March 3, 2014 @ 9:01pm PST

Epix logoThe companies finally put a date on the agreement made in December for the No. 2 cable operator to offer the premium service which has been struggling to expand its distribution. Time Warner Cable will help to generate some buzz by offering its digital video customers a three-month free trial of Epix, Epix 2, Epix 3, and Epix Drive-in. Epix will be available in standard and high definition, while Epix Drive-In will be only in SD. In addition to the linear channels, TWC will offer Epix programming on VOD and will stream content to the service’s app. “This is yet another way of showing that we appreciate our customers’ loyalty and are consistently working hard to provide even more value to their service,” says TWC’s Jeffrey Hirsch. The cable company is eager to slow, and possibly reverse, the decline in its video subscriptions. Meanwhile Epix — owned by Viacom, Lionsgate and MGM — sees the deal as an opportunity to build momentum for additional deals, possibly including with Comcast, which plans to buy TWC, and DirecTV.  Read More »

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Can Comcast Be Trusted? Company Report Says It Exceeded Promises In NBCU Deal

By | Monday March 3, 2014 @ 9:17am PST

You can bet that government officials and opponents of Comcast’s $45.2B planned acquisition of Time Warner Cable will scrutinize its just-released third annual report describing how it has fulfilled the promises it made in 2011 to win FCC approval for the deal to buy NBCUniversal. Comcast-new-logo__130212144603-200x112Opponents already say the cable giant can’t be trusted. ”To the extent that Comcast has a history of breaching its legal obligations to consumers, such history should be taken into account when evaluating Comcast’s proposal for future market expansion,” Sen. Al Franken (D-Minn.) said last week in a letter to FCC Chairman Tom Wheeler. But Comcast says the new 90-page report shows that it has “continued to meet and in many cases exceed our obligations.” For example, it says that its Internet Essentials program has provided home broadband service to more than 250,000 low income families, and has exceeded by 64 the requirement to provide courtesy video and broadband to an additional 600 schools, libraries and community institutions in underserved areas. (The company says that tomorrow it will “make an important announcement about the future of the [Internet Essentials] program.”) For online video Comcast says it has “new or renewed agreements with Amazon and Netflix, among others” resulting in a third year in which it has made these deals to provide programming to potentially competitive services without having to go to arbitration.
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Comcast Might Create A Company For 3M Subs It Would Unload After Deal: Report

By | Friday February 28, 2014 @ 1:47pm PST

The cable giant has said that, if it buys Time Warner Cable, it will jettison systems with 3M subs to bring its market share below 30% — once a federally mandated cap.Comcast-Time-Warner-Cable-logos__140213130107-150x150__140213191744 But instead of selling the franchises to another cable company, Comcast is considering the possibility of spinning them off as a new publicly traded company, Bloomberg reports citing “people with knowledge of the matter.” If it did so, the new entity would be the No. 4 cable operator after Comcast (with TWC), Cox, and Charter. Regulators might like the idea, the story says, because it “would create a new competitor.” That would seem to fly in the face of Comcast’s claim that its $45.2B acquisition of TWC wouldn’t reduce competition because cable companies don’t compete with one another. The conventional wisdom holds that Comcast would unload systems in rural areas that tend to be more vulnerable to competition from satellite services, and that would be poor prospects for sales of ads and business services — two of cable’s fastest-growing initiatives. This morning Liberty Media CEO Greg Maffei, whose company is the No. 1 shareholder in Charter, said that execs are still interested in finding acquisition targets, possibly including ones that Comcast is ready to cut loose.

Related: Time Warner Cable Warns Investors About Comcast Deal Risks

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