Report: Cox-Liberty Media Talking Merger

Cox Communications Inc., the third-largest U.S. cable provider, has held talks about combining with Charter Communications Inc.

According to Bloomberg Businessweek, Cox President Pat Esser has discussed a deal with representatives from Liberty Media Corp., which owns a 27 percent stake in Charter, said one of the people, who asked not to be identified because the negotiations are private. The structure of a potential deal hasn’t been determined, including which company might be the acquirer, the other person said. Cox and Charter also haven’t begun direct talks, the people said.

Liberty and Charter are also still pursuing an acquisition of Time Warner Cable Inc., the people said. Billionaire John Malone, who controls Englewood, Colorado-based Liberty, has said he wants Charter to get bigger so it can gain leverage in negotiations with TV networks, which have sought higher prices for the use of their programming.

Cox has 4.8 million video subscribers, while Charter has 4.4 million, according to Craig Moffett, an analyst at Moffett Research LLC in New York.

“A Cox deal, if available, makes a ton of sense for Charter,” Moffett said today in a research note. “Nosebleed leverage wouldn’t be necessary; a merger of equals would leave balance sheet room for subsequent deals, while still giving Charter the benefit of a doubling of scale.”

Todd Smith, a spokesman for Atlanta-based Cox, declined to comment. Courtnee Ulrich, a spokeswoman for Liberty, didn’t return phone and e-mail messages.

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