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By Alex Sherman and Ed Hammond
May 13 — Charter Communications Inc. continues to work on a takeover of Bright House Networks LLC, seeing the deal as a precursor to a bid for Time Warner Cable Inc., people with knowledge of the matter said.
The companies are in active discussions to reach a new deal, the people said, during an exclusivity period that lasts through most of May. The talks may continue even after that exclusivity ends, the people said.
Charter and Bright House had agreed on a $10.4 billion acquisition, which they announced in March. That was contingent on the closing of Comcast Corp.'s purchase of Time Warner Cable. The agreement included a provision that Charter would renegotiate with Bright House for 30 days if the Comcast-Time Warner Cable deal was called off, which it was on April 24.
Locking down the purchase of Bright House, the sixth- largest U.S. cable company, would bolster Charter's ability to finance an eventual Time Warner Cable takeover, the people said. Charter and Time Warner Cable are discussing the potential structure of their own deal, people have said.
A spokesman for Charter declined to comment. A spokeswoman for Syracuse-based Bright House, which is owned by Billionaire Si Newhouse's Advance Publications Inc. couldn't immediately be reached to comment.
Any deal between Charter and Time Warner Cable will be complicated by the fact that several key investors -- including Newhouse, Charter-backer John Malone, and Time Warner Cable's current shareholders -- will all own a piece of the new company, the people said today.
Charter has a market value of about $20 billion, compared with Time Warner Cable's almost $44 billion. A deal with Time Warner Cable would leapfrog Stamford, Connecticut-based Charter from the fourth-largest U.S. cable provider to the second- biggest, behind Comcast.
During Charter's exclusivity with Bright House, Time Warner Cable can match any offer Charter makes, people with knowledge of the matter have said. New York-based Time Warner Cable has the right to block a Charter-Bright House deal because of a longstanding arrangement to negotiate programming for Bright House.
To contact the reporters on this story: Alex Sherman in New York at email@example.com and Ed Hammond
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