Charter Communications (CHTR -2.29%) is in a tricky position. On one hand, the company has the backing of perhaps the most ambitious mind in the cable industry: Liberty Media's (FWONA) John Malone. On the flip side, the company was recently left out of its arranged marriage with Time Warner Cable, leaving it looking for a new partner in an increasingly tense cable-industry landscape. Rounding out of the top-five pay-TV providers in the nation includes both satellite TV giants -- DISH Network and DIRECTV -- but neither appears to be a reasonable option for Charter. That means it needs to look further down the ladder to achieve its plans of market share gains via acquisition. Should investors feel hopeful about the future of Charter?

Still truckin'
The M&A front may be a struggle for Charter, but its operating business is actually doing quite well. Adjusted earnings of $0.31 per share came in sharply ahead of the average Wall Street estimate of $0.21 per share. Revenue climbed 12% to $2.15 billion.

With the exception of the voice segment, which saw sales decline a precipitous 17.2%, the cable business is looking strikingly strong amid an industrywide struggle to keep video subscriber and revenues growing (or even stable). Video subscriber sales grew more than 12% while broadband was predictably higher as well.

As Internet streaming businesses have invaded the traditional pay-TV landscape, the cable providers have increasingly relied on broadband growth to soften the blow to their core businesses. While Charter posted higher video revenue, it was due to price hikes and not organic growth. The segment lost 2,000 subscribers in the quarter, while broadband gained 93,000.

Charter generated nearly $600 million in cash flow, with $84 million flowing back to investors in the form of free cash.

The larger question
For now, Charter is doing just fine, but the shifting tides of the cable industry requires Charter to move quickly so that it isn't again, and ultimately, left out in the rain.

The best thing the company has going for it on this front is the backing of Malone's Liberty Media, which owns just over 27% of the company. Without doubt, Malone is working closely with Charter's CEO. Options range from jockeying for the potential 3 million divested subscribers from the Comcast-Time Warner Cable deal to buying the privately held and slightly larger cable company: Cox Communications.

Despite his mercurial public image, John Malone is a deal-making magician and tactician at arranging valuable partnerships. Charter Communications is a big part of his strategy to consolidate today's media industry, and investors can be sure that 2014 will see plenty of action.

Charter isn't the most attractively priced based on its estimated forward earnings (more than 30 times), but it looks better on an EV/EBITDA basis (9.77 times). The company still has plenty of debt to wrangle with (it emerged from bankruptcy in 2009) but seems to generate plenty of cash flow to meet obligations. While not a screaming buy, the company does have compelling factors. Investors interested in the business may look to Liberty Media -- a more diversified, nimble business that will directly benefit from any victories that Charter may find.