Charter Spurns Sprint’s Proposal To Merge: Update

Updated: The Wall Street Journal had the media and telecom worlds buzzing tonight with a report  that Sprint Corp proposed a full merger with Charter Communications,

But don’t get too excited yet. Charter’s not interested in the plan to create a new public company controlled by Sprint’s owner, Japan’s SoftBank, Bloomberg says.

Charter declined to comment.

A deal would be complicated to structure, and would sent ripples through the cable and wireless industries. If successful, it could create a TV, broadband, wired and wireless phone juggernaut to rival AT&T which owns DirecTV and is preparing to close its $85 billion acquisition of Time Warner.

Liberty Media’s John Malone is Charter’s largest shareholder — and enthusiastic about cable industry’s prospects in the digital era. He also owns or has influential stakes in Discovery Communications (which is preparing to buy Scripps Networks Interactive), Lionsgate, Liberty Global, SiriusXM, and Live Nation.

The No. 4 wireless company has been eager to find a partner to help it compete with Verizon, AT&T and T-Mobile. Sprint and T-Mobile have held on-again/off-again merger conversations.

But Sprint put them on hold recently, and agreed to talk exclusively with Charter and Comcast about a wireless services deal. The exclusivity period expires on Monday. During this period, Sprint chairman Masayoshi Son talked to Warren Buffett and  Malone about the possibility of making a multi-billion dollar investment in the wireless company.

One potential complication with the Sprint-Charter idea: The No. 2 cable company would need Comcast’s approval to proceed.

The cable companies agreed in May to “work only together with respect to national mobile network operators” for one year. They specified, in an SEC filing, that during that period they can’t make a major deal affecting their wireless businesses without each other’s “prior consent.”

Both companies are creating their own wireless offerings would depend heavily on their WiFi networks, and a wholesale agreement with Verizon to handle cell phone calls.

This week, Comcast CEO Brian Roberts told analysts that he doesn’t feel he needs to invest more heavily in wireless.

“It’s a tough business,” he said, adding that “I don’t see something happening in that industry that we envy a position that we don’t have today.”

Later. Charter CEO Tom Rutledge  said he agrees with Roberts’ view.

“We like our relationship with Verizon,” he said. “We like our potential relationship with Comcast. And we do think that the industry has a lot of challenges in front of it, and that it’s fully penetrated.”

Charter’s also still digesting the Time Warner Cable systems it bought last year. At the end of Q2 it had $61.8 billion in debt.