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Time Warner Cable Said to Be Near $3 Billion Insight Deal

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Time Warner Cable Said Near $3 Billion Purchase of Insight
Time Warner Cable Inc. trucks stand in the East Village neighborhood of New York, U.S. Photographer: Jonathan Fickies/Bloomberg

Aug. 15 (Bloomberg) -- Time Warner Cable Inc., the second-largest U.S. cable-television operator, is in advanced talks to buy Carlyle Group’s Insight Communications Co. for about $3 billion, people with knowledge of the matter said.

Time Warner Cable may announce an agreement to buy Insight as soon as today, said the people, who spoke on condition of anonymity because the talks are private. The talks may also fail to lead to a deal, the people said.

The acquisition would be Time Warner Cable’s biggest since its spinoff from Time Warner Inc. in 2009 and may help the cable operator compensate for declining pay-TV demand. A wider footprint would let Chief Executive Officer Glenn Britt reach more customers and cut duplicate sales staff and infrastructure.

Insight, based in New York, is the ninth-largest U.S. cable operator, with 679,700 basic video customers in Kentucky, Indiana and Ohio, according to its website. Carlyle, a Washington-based private equity firm, along with co-founder Sidney Knafel and Michael Willner, took Insight private in 2005.

“Keeping up the scale is quite important for the cable companies because they are able to leverage the scale in terms of the number of TV subscribers they have when they are making deals with the content owners,” said Richard Broughton, an analyst at IHS Screen Digest in London. “There are a lot of smaller operators all over the place.”

Crestview, MidOcean

Justin Venech, a spokesman for Time Warner Cable, and Chris Ullman, a Carlyle spokesman, declined to comment.

Time Warner Cable rose 77 cents to $65.51 on Aug. 12 in New York Stock Exchange composite trading. The stock climbed as much as 2.5 percent in Germany and rose 1.4 percent to the equivalent of $64.88 as of 11:54 a.m. in Frankfurt.

Two other private-equity firms, Crestview Partners and MidOcean Partners, bought a stake in Insight from Carlyle and other shareholders last year.

Time Warner Cable wanted to pay about $2.5 billion for Insight and raised its offer after Insight’s owners lowered their asking price, said one person familiar with the situation. Insight had also sought a buyer in an auction, in which Time Warner Cable didn’t participate, the person said.

Time Warner Cable and rival pay-TV companies are coping with falling customer numbers as the U.S. economy slows and as competition builds from online rivals such as Netflix Inc. and Hulu LLC.

The six largest publicly traded U.S. cable and satellite-TV providers lost about 580,000 customers combined in the second quarter, the biggest such drop in history, according to company and Bloomberg data. Time Warner Cable lost 130,000 residential video subscribers in the period, more than analysts estimated.

Buying Insight would help Time Warner Cable consolidate its position in states such as Kentucky and Indiana while boosting customer ranks by as much as 5 percent. Time Warner Cable has 14.4 million “customer relationships,” according to its website, compared with 759,400 at Insight. Those figures include Internet and phone users, in addition to cable-TV customers.

To contact the reporters on this story: Serena Saitto in Sao Paulo at ssaitto@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net; Zachary Mider in New York at zmider1@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net

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