• by Wayne Friedman , June 28, 2013

Liberty Media Corp., controlled by storied cable executive John Malone, is pursuing the second-biggest cable operator, Time Warner Cable -- even after the company rejected his efforts, according to reports.

Malone wants to put the deal together through Liberty and Charter Communications, the fourth-largest cable operator, which he bought at 27% this past May. At the same time, Charter is considering acquiring Long Island, NY-based Cablevision Systems Corp., the fifth-largest cable provider.

Until recently, Malone had been intent to sit on the sidelines while Liberty Media grew with cable/Internet/media investments, as well as owning home shopping network QVC and pay-TV channels Starz.

The potential price tag of the deal could be nearly $40 billion for Time Warner. Also to be considered is whether the deal would include taking on Time Warner’s $12.5 billion in debt. Malone may have a hard time coming up with cash or finding other ways to structure the deal.

While the cable industry has grown steadily and strongly since Malone got into the business in the 1970s, he now believes cable operators need more consolidation. He said recently at a Liberty Media shareholder meeting:  “The whole name of the game in the cable business is scale.”

Malone built Tele-Communications Inc. (TCI) in the 1970s and 1980s into one of the largest cable operators before selling it to AT&T Corp. in 1999. Later, it became part of Comcast after a $58.7 billion deal in 2002.

All three companies -- Time Warner Cable, Charter, and Cablevision -- witnessed stock prices climbing anywhere from 4% to 5% in mid-week on news of the potential deals. The story first broke in Bloomberg News.

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