Adelphia/Charter
cramer is pro-Charter; this is a pretty long shot which i am sure he knows, but not as long as Liberty Media partnering with Adelphia. The other spin is comcast and time warner doing an adelphia buyout, and each getting their favorite pieces. this article this morning surprised me. Cox would only be interested in a piece and is not interested in anything not 'efficient' to Cox. Cox wants to run at its size and well .. or so says the ceo. this would be significant to Charter; i don't know how they do it.
Buyout of Adelphia would be golden opportunity for Charter
By James Cramer, TheStreet.com
May 8, 2004
At last, a way for Charter to double.
So simple: It buys Greenwood Village-based Adelphia. It pays a reasonable price for the whole thing, which is now unlevered versus most cable companies; it gets Paul Allen to kick in some more cash; and it becomes the nation's second-largest cable company. It also becomes instantly investible. Pipe dream?
If it's such a pipe dream, why would a tough realist, UBS' Aryeh Bourkoff, liked by bull and bear alike, embrace the idea on national television? If it's so far-fetched, why didn't Carl Vogel, Charter's terrific CEO, just flat-out deny the possibility on national television when he had the chance the other night on Kudlow & Cramer?
Let's figure this out. Adelphia's for sale. It's run by caretakers. It could be broken up piecemeal, no doubt. But it would be more logical for a buyer to take it all down and then sell it piecemeal, especially if the buyer could use it to reliquefy its balance sheet, as Charter could.
Think about the competition: Comcast may be too big already to buy Adelphia, and it has committed to buying back stock and getting back its mojo as a stock. I think that the record's clear; if the Robertses want the stock higher, they can show some numbers that will take it higher. And they can buy back stock hand over fist with the cash flow that the AT&T-Media One deal is generating.
I thought Time Warner might buy Adelphia, but Time Warner was supposed to buy Cablevision and didn't. I think Time Warner isn't focused enough to buy Adelphia, and I still like the fact that Time Warner doesn't have new debt on the books.
Cox pretty much has taken itself out of the running, according to Bourkoff. Who does that leave?
Charter. And Charter needs Adelphia as a way for Paul Allen to have a chance to recover all that money he put in because Allen's company has lots of dream devices it needs to install to get higher bills from cable users. It's a natural.
Even without the Adelphia properties, I still like Charter. But to return Charter's stock to glory, the company needs to buy Adelphia. |
