NEW YORK — There’s nothing like a bidding war to turn the stock of a lackluster company into a star.
Shareholders of Time Warner Cable, which has been losing video customers, are big winners after rival Comcast agreed to buy the company for a nice premium. Whether Comcast owners will see any benefit is less certain.
For owners of Time Warner Cable, it’s been a year of profitable courtships. Before Comcast swept in, another Time Warner Cable rival, Charter Communications, made several sweetened offers for the struggling company, helping boost its stock 67 percent in the past 12 months.
“The premiums have built over time,” says analyst Nick Del Deo of MoffettNathanson Research, despite what he calls “lackluster results.”
Time Warner Cable lost 833,000 video customers last year, after dropping nearly a million the previous two years. It’s a “turnaround project,” said would-be buyer Charter last month. Time Warner Cable apparently agrees, with its chief financial officer calling last year’s results “dismal.” The company recently unveiled a $3.7 billion spending program to upgrade its network and attract more customers.
To which the optimists retort: Bad results leave plenty of room for improvement. In that sense, they are good.
Some financial analysts noted Thursday that the greater heft of a combined Comcast-Time Warner Cable would help drive sales of “triple-play” packages. Those packages combine Internet, cable and phone service. A bigger company would also give the company move leverage in negotiating deals over how much to pay Disney, Viacom and other content providers.