Dear Time Warner: We Want You. Love, Charter Communications

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Charter Communications (NASDAQ:CHTR) is reportedly preparing an offer letter for Time Warner Cable (NYSE:TWC) that comes in under $135 a share, sources familiar with the matter have told Bloomberg. Charter is the fourth-largest cable company in the U.S. and is partly owned by famed cable investor John Malone’s conglomerate Liberty Media (NASDAQ:LMCA). Malone has been vocal about his belief that more consolidation is necessary in the cable industry.

Charter isn’t without competition in its desire to scoop up Time Warner. Comcast Corp. (NASDAQ:CMCSA), the largest cable provider in the country with 23 million subscribers, is also rumored to be interested in buying Time Warner. Last week, it was reported that Comcast has hired JPMorgan Chase & Co. (NYSE:JPM) to advise the company about a possible takeover.

Reports have said that Time Warner would prefer a deal with Comcast, as the company has a bigger geographical reach and could pay in cash. Such a deal would result in the combined company having 35 million subscribers, while the second-biggest cable company in the U.S., Cox Communications, only has 4.5 million. Such a deal could come under scrutiny from regulators, but since cable companies are divided geographically and mostly compete with satellite and telecom companies instead of each other, it could be allowed to pass.

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