Charter Communications Inc. (NASDAQ: CHTR) is reported to be preparing an offer to acquire larger competitor Time Warner Cable Inc. (NYSE: TWC) at a price below $135 a share. Time Warner has reportedly indicated that it would likely accept an offer north of $150 a share, so if Charter comes in with its low-ball (a bear hug) offer the primary reason is that it wants to get the ball rolling.

Time Warner, the country’s second largest cable operator with some 11.4 million subscribers, has indicated its preference for a tie-up with Comcast Corp. (NASDAQ: CMCSA), the country’s biggest cable company with 22 million subscribers. Whether such a pairing would pass antitrust review is highly dubious.

Time Warner lost 306,000 cable TV subscribers in the third quarter. Comcast lost nearly 130,000 and Charter had about 4.2 million residential cable subscribers at the end of the third quarter, a net loss of 143,000 in the past 12 months.Total cable subscriber numbers are down more than 350,000 compared with last year.

Time Warner is probably dreaming if it thinks it can command a price of $150 or more a share. It is losing customers for its pay cable service and though its residential and commercial Internet and phone businesses are growing, there is a lot of competition for those customers and Time Warner may not be able to make up the cable losses.

Still, the writing is on the wall. Cable subscriber numbers are down by nearly 10 million since reaching a peak of nearly 67 million in 2001 according to research firm SNL Kagan. Streaming video customer numbers are headed in the other direction, from 14.5 million in 2001 to 46.8 million in 2012, not far behind the 56.4 million total cable customers.

Charter was reported to have been talking with several banks about putting together a deal for the larger company and today’s reports may be the beginning of a serious round of bidding for Time Warner. Other bidders might include Dish Network Corp. (NASDAQ: DISH), whose chairman Charlie Ergen has made no secret of his belief that the pay TV industry needs to consolidate but has so far been unable to strike a deal for wireless spectrum or a terrestrial based partner.

At $135 per share, Time Warner would be valued at about $67 billion (including debt), which is nearly 5 times Charter’s market value of around $14 billion. Charter might also be angling for a deal that would include a swap with Comcast if Time Warner and Comcast make a deal and are forced by antitrust regulators to hive off some assets.

Time Warner’s shares are trading up 0.3% at $131.48 in the late afternoon on Friday in a 52-week range of $84.57 to $139.85.

Charter stock is trading down less than 0.1% at $131.76 in a 52-week range of $68.44 to $144.02.

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