You would think that after just having finished a mega-merger with Time Warner Cable last year, Charter might want to take a break before diving into any more major transactions. And yet that hasn’t stopped Sprint from coming ’round knocking at Charter’s door.
What’s the would-be deal?
Late last week, news of Sprint’s interest in Charter first began to bubble up when thee Wall Street Journal reported that the two companies were in talks to come together and create one massive new multi-media entity.
Sprint had already been in talks with both Charter and Comcast — who are working together on mobile — about a deal that would allow both cable giants to resell mobile service on Sprint’s network through their own respective brands, much as they already do with the Verizon network.
But as the WSJ reported, coming out of those talks, Sprint chairman Masayoshi Son has gone farther, and is pursuing a full-blown merger with Charter.
The resulting business would be a massive, publicly-traded company that would bring together one of the nation’s two largest cable and internet companies with a large and established mobile provider, positioning it well to keep competing against Comcast and Verizon as the communications and media industries continue to consolidate their interests, power, and leverage.
Although Sprint is the smaller and more beleaguered of the two businesses, SoftBank, the Japanese company that owns Sprint, would be in charge of the merged company under Son’s proposal.
Why so merger-happy?
We were barely more than a week past the 2016 election when investors giddily started speculating about who could leap into metaphorical bed with whom, given the expectations that 2017 would bring a business-friendly and regulation-hostile administration.
The combinations investors mulled over included basically every pairing you can think of among the major internet companies (including the mobile phone ones). And indeed, although as yet none of the players has inked an actual deal with anyone, it doesn’t appear to be for lack of trying.
Verizon, for instance, has been making noise this year about wanting to merge with, well, anyone: Comcast, Disney, CBS… the list is not exclusive.
And Verizon did in fact make an actual offer for Charter earlier this year, reports say, but was rebuffed. Big V was willing to offer about $100 billion, but Charter — now including TWC, and a legitimate rival in size to Comcast — said that wasn’t enough.
Sprint is particularly eager.
Sprint has been trying to position itself for — or wheedle itself into — a merger for years now. It’s the smallest of the big four wireless companies by far, and hasn’t had the success in recent years that third-place T-Mobile has enjoyed.
Sprint went to the White House in March to discuss potential mergers, perhaps with either Comcast or T-Mobile, and the rumor mill has only been heating up since then.
A Sprint merger with Charter would not actually preclude Sprint also merging with T-Mobile, Bloomberg and the WSJ both note. The post-merger Charter/Sprint could simply then go on and also acquire T-Mobile, in what would indeed be an enormous transaction.
But Charter’s keeping coy.
After sitting on the rumors all weekend, Charter said on Monday that is has “no interest” in pursuing a merger with Sprint.
In a statement given to Reuters and others, a Charter spokesperson said, “We understand why a deal is attractive for SoftBank, but Charter has no interest in acquiring Sprint.”
That said, “not interested” doesn’t mean “never,” and “cool” doesn’t mean, “hostile.” Bloomberg reports that despite the rebuffing, the two companies are still in talks.
Investors, however, appear relieved: Charter’s stock price soared several percent after news of its disinterest in Sprint became public.