Malone's Moves Put Spotlight on Cablevision

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NEW YORK (TheDeal) -- What's not to like about the headline slapped on Tuesday's research update from Macquarie Capital (USA) Inc. about Liberty Media Corp.'s John Malone re-entering the U.S. cable business after a 14-year hiatus? All it had to say was "He's Back ..." because it goes without saying he'll never again go away.

The Macquarie update remains neutral on Charter Communications Inc., the cable company in which Malone's Liberty Media is taking a 27.3% stake by acquiring shares from private-equity holders in a $2.6 billion transaction. But that's mostly because Charter's turnaround since emerging from bankruptcy in late 2009 has already been priced into the stock.

Shares of Liberty Media were down 0.5% to $109.53 in mid-day trading while Charter Communications was droppedin 0.9% to $102.34.

Yet the update does view the return of Malone, who headed former industry leader Tele-Communications Inc. during its explosive growth, as having "positive implications" for the cable industry in general. And let's not forget the deals that Malone seemed to forge weekly before selling TCI to AT&T Corp. in 1999. Their implications are positive for cable M&A in particular.

"He's not going to just sit there and watch his equity go up," says a longtime follower of Malone. "No, he's going to offer Charter his services for all the opportunities he sees in terms of financial and operational engineering."

One of those opportunities will almost surely be Cablevision Systems Corp., a New York-centric operator that last month sold its Optimum West unit to Charter for $1.6 billion. Optimum West, with 366,000 customers in the Rocky Mountains, had been an anomaly inside Cablevision since its acquisition in 2010. Cablevision's $1.4 billion purchase of the remote cable system -- known as Bresnan Communications LLC back then -- struck many as a concession to the acquiring company's then-COO Tom Rutledge.

After eight highly applauded years at Cablevision, Rutledge was reportedly getting bored in the job and starting to attract poachers. He wound up leaving the company anyway, under murky circumstances in December 2011, only to sign on as Charter's CEO later the same month. This means Rutledge bought the old Bresnan system twice: first for Cablevision and second for Charter.