Chairman of Liberty Media John Malone attends the Allen & Co Media Conference in Sun Valley, Idaho July 12, 2012. REUTERS/Jim Urquhart

(Reuters) - John Malone, chairman of Liberty Media, is sounding out options for cable operator Charter Communications to acquire larger rival Time Warner Cable, according to a media report.

Liberty Media, which holds a 27-percent stake in Charter Communications, is working on how to structure an offer with enough cash to win over Time Warner Cable investors, Bloomberg reported Thursday, citing people familiar with the discussions.

Liberty Media is considering options such as borrowing against its own balance sheet or Time Warner Cable’s assets to raise the cash needed for an offer, the report said.

Time Warner Cable is the second-largest cable provider after Comcast in the United States.

Since cable pioneer Malone jumped backed into the U.S. cable market with Liberty Media’s investment in Charter earlier this year, analysts have predicted a wave of cable consolidation. The U.S. cable TV market is mature and faces rising programming costs.

Time Warner Cable shares were up 5.7 percent in afternoon trading. Cablevision, a smaller player in the cable industry, was also up 5.7 percent, with Charter 4 percent higher.