Cablevision Systems Agrees to Buy Bresnan for $1.36 Billion
Cablevision Systems Corp., the fifth-largest U.S. cable operator, has agreed to buy Bresnan Communications Co. for $1.36 billion, people close to the negotiations said.
Cablevision competed against bids from TPG Capital, BC Partners Ltd., Suddenlink Communications and Ascent Media Corp., said one of the people who declined to be identified because the details aren’t public. John Malone, chairman of Liberty Media LLC, owns 30.3 percent of the voting shares of Ascent Media.
Bresnan is expected to issue a statement announcing the deal today, the person said. Jeffrey DeMond, Bresnan’s chief executive officer, sent an e-mail to employees Sunday evening telling them Cablevision “emerged as the successful bidder.”
Acquiring Bresnan would give Cablevision a bigger slice of the burgeoning market for high-speed Internet services, where revenue is expected to rise to $210 billion globally in 2014 from $164 billion in 2009, according to ABI Research in Oyster Bay, New York.
“Bresnan is quite well-run, with well-upgraded systems that have been aggressively rolling out advanced services,” wrote analyst Richard Greenfield of BTIG LLC in New York, in a note to clients on June 9. “The quality of the systems is high and the competitive risks are low.”
Cablevision spokeswoman Kim Kerns and Andrew Cole, spokesman for the private-equity firm Providence Equity Partners Inc. helping sell Bresnan, didn’t respond to a voicemail and e- mail left for them seeking comment. TPG spokesman Owen Blicksilver and BC Partners spokeswoman Martha Kelly both declined to comment.
Bresnan, based in Purchase, New York, provides broadband- communication services in Montana, Wyoming, Colorado and Utah and is 30 percent-owned by Comcast Corp. Providence Equity has hired Credit Suisse Group AG and UBS AG to sell the company for more than $1 billion including debt, two people with knowledge of the matter told Bloomberg News earlier this month.
Bresnan Communications was founded in 1984 by William J. Bresnan, who was born in Mankato, Minnesota, according to the company’s website. Bresnan initially operated cable systems both in the Upper Midwest and internationally, before focusing on the Rocky Mountain states, the website said.
Bresnan, who repurchased the company in 2003 for $525 million with backing from Providence, died last year. DeMond, a long-time executive who served as chief financial officer and president, has been CEO since last year.
The purchase expands the customer base of Cablevision from the New York City region into the western U.S. market, which is attractive because it has lower pay-TV penetration rates than Cablevision’s home market and no competition from Verizon Communications Inc.’s fiber-optic TV service. The move will allow Cablevision to add Bresnan’s 320,000 subscribers to its more than 3 million. The deal will add to, or at least not hurt, Cablevision’s free cash flow, BTIG’s Greenfield wrote.
Chief Executive Officer Jim Dolan, whose family controls Cablevision, spun off the company’s Madison Square Garden unit this year to concentrate on the more profitable cable assets. On the company’s May 6 conference call, Gregg Seibert, an executive vice president, said the company’s first priority was to use its free cash flow to invest in and expand the business.
Providence is also trying to sell Metro-Goldwyn-Mayer Inc. as the Los Angeles-based film studio, which Providence and other investors took private for $5 billion in 2005, struggles to repay $3.7 billion in debt. TPG Capital, Sony Corp. and Comcast Corp. also participated in that purchase.
Cablevision, based in Bethpage, New York, rose 3 cents to $23.40 in New York Stock Exchange composite trading on June 11. The stock has gained 9.8 percent year to date.
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