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Breaking News from CNBC's David Faber: Comcast Seeking Advice on Anti-Trust & FCC Concerns of TWC Deal - Sources

Friday, 22 Nov 2013 | 10:28 AM ET

WHEN: Today, Friday, November 22nd

WHERE: CNBC's "Squawk on the Street"

Following is breaking news from CNBC's David Faber. Following is a link to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000220580.

All references must be sourced to CNBC.

DAVID FABER: SHAREHOLDERS IN THE CABLE COMPANIES TODAY ARE PROBABLY SMILING A BIT OF COURSE ON REPORTS IN THE WALL STREET JOURNAL THAT CHARTER AND LIBERTY ARE LINING UP FINANCING TO HELP FUND A POTENTIAL BID FOR TIME WARNER CABLE. YOU MAY RECALL, THIS IS A STORY WE FIRST BROUGHT TO YOU RIGHT HERE ON THIS BROADCAST BACK IN JUNE OF COURSE. CHARTER AND LIBERTY HAVE BEEN TRYING TO GET TIME WARNER CABLE TO THE NEGOTIATING TABLE FOR QUITE SOME TIME, AND CONTINUE TO TRY TO DO THAT. AND IN FACT, INTERESTING TO NOTE, THAT THE COMPANIES ARE STILL SEEKING ENGAGEMENT HERE ON A DEAL. NOW, WHAT THE PRICE ON THAT DEAL WILL BE, HOW MUCH OF THAT WILL BE FINANCED TO OFFER A CASH PORTION THAT SOME WILL SAY NEEDS TO BE $90 OF CASH, IN ADDITION TO LIBERTY AND PERHAPS – OR CHARTER AND LIBERTY STOCK – IT IS UNCLEAR AT THIS POINT. BUT THE QUESTION CONTINUES TO BE, WILL THEY TRY TO MAKE A PUBLIC PROPOSAL TO CONTINUE TO PUT SIGNIFICANT PRESSURE ON TIME WARNER WHOSE MANAGEMENT IS UNDER FIRE A BIT. CHANGING OF COURSE, GLENN BRITT GOING OUT, ROB MARCUS COMING IN AS THE CEO WITH THE NEW YEAR. THEY REPORTED NOT A GREAT QUARTER RECENTLY AT TIME WARNER. HERE'S THE NEWS WE HAVE FOR YOU ON THIS THAT HAS NOT BEEN REPORTED, BUT WILL BE BY US. WHICH IS THERE IS ANOTHER POTENTIAL BIDDER OUT THERE FOR TIME WARNER CABLE. AND THAT COMPANY IS OUR PARENT, COMCAST. I CAN TELL YOU AT THIS POINT THAT COMCAST, WHICH HAS BEEN LOOKING AT THIS FOR SOME TIME, AND AS ALWAYS IS THE CASE, ENGAGES IN OFF AND ON AGAIN CONVERSATIONS ABOUT THE BROAD TOPIC OF CONSOLIDATION WITH THE LIKES OF TIME WARNER. HAS SOUGHT ADVICE VERY RECENTLY FROM OUTSIDE COUNSEL AND THE LIKE ON ANTI-TRUST AND FCC CONCERNS THAT MIGHT ARISE, SHOULD IT TO PURSUE – OR WOULD IT TO PURSUE A TIME WARNER CABLE PURCHASE. NOW THERE ARE NO DISCUSSIONS ONGOING BETWEEN TIME WARNER CABLE AND COMCAST ABOUT A PRICE OF ANY POTENTIAL DEAL. ALTHOUGH I CAN ALSO TELL YOU, PEOPLE CLOSE TO THE SITUATION TELL ME TIME WARNER CABLE HAS MADE IT ABUNDANTLY CLEAR TO COMCAST THAT IF IT WERE ITSELF TO PURSUE A CONSOLIDATION PATH, NAMELY SELL ITSELF, IT WOULD PREFER COMCAST AS ITS PARTNER IN DOING THAT. NOW AGAIN, WHILE THERE ARE NO TALKS ABOUT DEAL TERMS, IT IS INTERESTING TO NOTE THAT COMCAST HAS CHOSEN TO TAKE A LOOK AT WHAT WOULD BE THE POTENTIAL IMPEDIMENTS TO A DEAL ON BOTH THE FCC AND ANTI-TRUST FRONTS. YOU MAY RECALL, WHILE WE HAD OWNERSHIP CAPS FOR QUITE SOME TIME IN THIS COUNTRY, NAMELY THAT YOU COULD ONLY HAVE 30% OF THE CABLE HOUSEHOLDS IN YOUR SYSTEM. THAT IS NO LONGER THE CASE. THAT WAS THROWN OUT BY THE D.C. – I THINK IT WAS THE COURT OF APPEALS – U.S. COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA -- THERE ARE NO CAPS AT ALL. YOU CAN GO WELL ABOVE 30% AND IN FACT A TIME WARNER CABLE DEAL MIGHT NOT EVEN TAKE COMCAST TO THAT 30% LEVEL OR IT WOULD JUST GET THEM TO IT. ON THE ANTI-TRUST FRONT THOUGH, THAT IS NOT AN ISSUE. WHETHER THE FCC THOUGH WOULD OBVIOUSLY HAVE ISSUES WITH THE FACT THAT COMCAST CONTROLS A GOOD DEAL OF CONTENT, US FOR EXAMPLE AND MANY OTHERS – NBCUNIVERSAL – AND WOULD HAVE CONTROL OF SO MANY HOUSEHOLDS IS A POTENTIAL ISSUE. MIKE ANGELAKIS, THE COMPANY'S CFO, I HAVE BEEN TOLD BY PEOPLE THAT HAVE SPOKEN TO HIM, TELLS INVESTORS, HEY WE'RE NOT INTERESTED IN EVER SIGNING ANOTHER CONSENT DECREE. I WILL ALSO TELL YOU, HOWEVER, THOSE SAME INVESTORS IN COMCAST FROM WHAT I'M HEARING, HAVE MADE IT CLEAR TO THE COMPANY THAT THEY WOULD LIKE IT TO LOOK AT A POTENTIAL TIME WARNER CABLE TRANSACTION AND ARE IN FACT ENCOURAGING THAT. WHY? WELL FOR THE SAME REASONS CHARTER WOULD THINK ABOUT DOING IT. IT IS EXTRAORDINARILY ACCRETIVE TO CASH FLOW, THE GEOGRAPHIES ACTUALLY LINE UP QUITE WELL FOR COMCAST AND TIME WARNER CABLE AND IT WOULD BE ACCRETIVE OFF THE BAT, WHILE YOU WOULD LEVER UP A BIT, YOU WOULD BE ABLE TO BORROW AT EXTRAORDINARILY LOW LEVELS AND YOU WOULD BE ABLE TO DELEVER VERY QUICKLY GIVEN THE FREE CASH THAT WOULD BE COMING FROM THE COMBINED COMPANY AND THE SYNERGIES AVAILABLE. THAT IS ALSO THE CASE FOR CHARTER AND THAT IS WHY CHARTER STOCK IS UP AND TIME WARNER CABLE SHARES ARE UP BECAUSE BOTH THEIR SHAREHOLDER BASES DO SEEM TO EMBRACE THE IDEA OF CONSOLIDATION, THE SYNERGIES THAT WILL RESULT, THERE IS ALSO A $8 BILLION NET OPERATING LOSS AT CHARTER THAT COULD BE USED – EXCUSE ME THAT COULD BE USED IN A CHARTER, TIME WARNER CABLE DEAL, WHICH WOULD NOT BE AVAILABLE TO COMCAST. SO WE SHALL SEE HOW THIS DEVELOPS. NOTHING SAYS IT WILL BE A DEAL OF ANY KIND. THAT CHARTER COMES PUBLIC WITH A DEAL, GIVEN IT HAS BEEN – REFUSED TO DISCUSS IT AT TIME WARNER CABLE OR THE COMCAST MOVES AHEAD. BUT THAT IS WHERE WE STAND ON THIS SO-CALLED CONSTANT CONVERSATIONS ABOUT CONSOLIDATION IN A VERY IMPORTANT ARENA IN U.S. TELECOMMUNICATIONS.

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