Talks between Comcast Corp and Charter Communications Inc over how they could together buy Time Warner Cable Inc quickly soured as the two bickered over price and the feasibility of engineering a split of the No. 2 U.S. cable operator.
Charter, backed by billionaire John Malone's Liberty Media Corp, had been pursuing Time Warner for months, but was not making any headway as its larger rival - nearly three times its size by market value - asked for $8 billion more than what it had offered.
But Comcast actually believed Time Warner Cable's $160 per share counter to Charter's $132.50 per share bid was reasonable, several people familiar with the situation said on Thursday. At the same time, it worried that splitting a public company with assets in multiple markets and millions of subscribers would be tough, made even harder by the acrimony that had built up over the past eight months between Charter and Time Warner Cable.
On Feb. 4 Comcast and Charter met in a last-ditch attempt to see if they could work out their differences, the sources said. They could not.
So later in the day, Comcast Chief Executive Brian Roberts called Time Warner Cable's Rob Marcus to say that he was ready to make a bid for all of Time Warner Cable at a figure close to the asking price, according to the sources.
On Thursday, the two announced a $45.2 billion all-stock deal to create a cable behemoth, with an empire stretching from New York to Los Angeles. The deal is the largest M&A transaction so far this year and the third-largest in the media and entertainment sector of all time, according to Thomson Reuters data.
If the deal closes, it could give Comcast unprecedented leverage in negotiations with content providers and advertisers. For that reason it is also likely to come under keen regulatory scrutiny.
Representatives for Time Warner Cable, Comcast and Charter declined to comment on details of the negotiations. All the sources asked not to be named because the conversations were private.
Interviews with several people who were intimately involved in negotiations, however, paint a picture of what went on behind the scenes over the last few days as the deal came together and how Charter lost a prize that it had worked so hard to win.
In some ways, these sources said, the two companies have Charter to thank for the deal. Although Comcast, the top U.S. cable operator, had