Guess who can help Charter win Time Warner Cable?
Charter Communications and Time Warner Cable have taken off their gloves in a battle for one of the country's largest cable networks. But investors should not lose sight of the muscle behind the scenes—media mogul John Malone. After several months of private approaches, Charter Communications went public earlier this week with a $38 billion offer for TWC accompanied by a 29-page slide deck criticizing its ineffective strategies. TWC struck back Wednesday with a detailed presentation of its own, accusing Charter Communications of trying to steal the company with a bid below historical deal multiples.

John Malone David Paul Morris | Bloomberg | Getty Images

Charter also remains on the hunt for ways to pad its offer. The company on Wednesday approached Comcast, which owns CNBC parent NBC Universal, asking if it wanted to purchase some of TWC's regional operations and subscribers, according to a person familiar with the matter. The person added that such a transaction could occur after Charter completes a deal of its own, but the talks remain "very early."

Notably quiet but another potential partner is Malone's Liberty Media , which owns 27 percent of Charter. Malone, an industry pioneer who once built TCI into a cable giant, has been a vocal advocate of cable consolidation and is effectively using his investment to bet on his thesis. Liberty hasn't committed to investing more money in Charter but views it as an option, according to a person familiar with the matter.

Such additional cash could come in handy very soon. Consider the current offer of $133.60 per share, which includes $82.54 in cash and the remainder in Charter shares. To get the deal done, Charter will probably need to get a bit closer to the $160 that TWC wants and increase the percentage of cash.

Unfortunately, the current offer will already give the combined company net debt of five times earnings before interest, taxes, depreciation and amortization. Investment bankers say Charter could probably borrow more money to sweeten its offer, even without Malone's participation. But relying on much more leverage would be risky. Comcast , for instance, has leverage of about two times.

A better solution would be for Malone to purchase more Charter shares. That would allow Charter to increase the cash component of its offer and keep leverage at a reasonable level.

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