Light Reading
MSO is going a little bit country via $1.36B buy of Bresnan, a Tier 2 cable operator that locks horns with Qwest in the rural Midwest

Cablevision Goes Country With Bresnan Buy

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
6/14/2010
50%
50%

Cablevision Systems Corp. (NYSE: CVC) outbid an array of companies to land Bresnan Communications LLC , a cable operator serving about 300,000 basic video subs and passing roughly 630,000 homes in rural parts of Wyoming, Colorado, Utah, and Montana, for $1.36 billion.

With Bresnan, Cablevision will take over a batch of upgraded systems in the Midwest that primarily compete with telco incumbent Qwest Communications International Inc. (NYSE: Q) (which is being bought by CenturyLink Inc. (NYSE: CTL)). This move expands Cablevision's operations beyond New York, New Jersey, and Connecticut, where it usually crosses swords with Verizon Communications Inc. (NYSE: VZ)

Bresnan has been upgrading its cable modem termination systems (CMTSs) to support Docsis 3.0, but has yet to introduce a Docsis 3-based service. Cablevision, by comparison, has already launched D3 in its current systems. Bresnan's also displayed some 700MHz mobile ambitions after putting up $3.8 million to obtain Block A licenses in Billings and Great Falls, Mont., and a Block B license for the state back in March 2008. (See Bresnan's 'Insurance Policy' , Arris Nudges Cisco for Northwest Cable Upgrades, Cablevision Launches 'Ultra' Docsis 3.0 Service , and The Great Cable Spectrum Speculation.)

Cablevision outbid several other MSOs that wanted to get their hands on Bresnan, an operator founded by Bill Bresnan, a cable industry pioneer who died last November of cancer. Other bidders reportedly included Charter Communications Inc. , Time Warner Cable Inc. (NYSE: TWC), Ascent Media Group LLC , Suddenlink Communications , and TPG Capital, a private investment firm. (See Cable Pioneer William Bresnan Dies at 75 .)

Paying a premium
Cablevision said it plans to buy Bresnan via a newly formed, unrestricted subsidiary of the MSO using standalone financing. Cablevision expects the subsidiary to be financed using non-recourse debt of about $1 billion and an equity investment by Cablevision of less than $400 million. Cablevision intends to close the deal in late 2010 or early 2011.

Sanford C. Bernstein & Co. Inc. analyst Craig Moffett said in a note issued this morning that the price Cablevision is paying is roughly 8.3 times his estimate of Bresnan's 2009 EBITDA (about $165 million), and highlights the big difference in the way the private and public market is currently valuing the cable industry.

"This [deal] represents a steep premium to current market multiples of 2009 EBITDA of 5.6x for Comcast, 5.8x for Time Warner Cable, and 6.3x for Cablevision," Moffett noted, adding that the deal works out to about $4,250 per subscriber.

Still, the deal isn't a huge one for Cablevision, with the newly acquired Bresnan subs accounting for roughly 9.5 percent of Cablevision's total sub base.

However, given that Bresnan's systems are already considered upgraded and well-run, questions are rife today about what long-term positives Cablevision will be able to produce from this particular purchase.

"Opportunities to squeeze out synergies are likely to be somewhat limited," Moffett noted. "This deal is not a turnaround story. It is a financial story."

Still, Cablevision hopes the buy will be a boon to shareholders. "We believe the acquisition of Bresnan is an excellent opportunity to leverage Cablevision's strong management team and build shareholder value," company president and CEO James Dolan said, in a statement.

Cablevision has tapped its COO, Tom Rutledge, to oversee the Bresnan properties.

Company officials are scheduled to discuss the deal in more detail later this morning.

— Jeff Baumgartner, Site Editor, Light Reading Cable

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Documentaries
Paul Bunyan's Giant Gigabit Plans

12|22|14   |   03:26   |   (0) comments


Gary Johnson, the CEO and GM of Minnesota rural operator Paul Bunyan Communications, discusses the company's 5,000-square-mile gigabit network rollout.
LRTV Interviews
CenturyLink: Building the Case for NFV

12|19|14   |   02:14   |   (0) comments


At the 2020 Vision Executive Summit, James Feger, VP, Network Strategy & Development at CenturyLink, talks about how the US operator is approaching virtual network functions from an operational and business case perspective.
LRTV Interviews
Liberty Global Sees Business Goldmine

12|18|14   |     |   (0) comments


Steen Sorensen, VP of business services for Liberty Global, explains where the giant international MSO sees growth potential.
LRTV Documentaries
EE: The Road to 5G

12|16|14   |   16:02   |   (1) comment


Andy Sutton, the principal network architect at UK mobile operator EE, explains how his company is using Wembley stadium as a wireless test bed and how that's helping EE to plan the evolution to 5G.
LRTV Huawei Video Resource Center
Highlights of Huawei's NFV Open Cloud Forum 2014

12|16|14   |     |   (0) comments


Huawei hosted its inaugural NFV Open Cloud Forum during the SDN & OpenFlow World Congress 2014 in Düsseldorf, Germany. The Forum brought together technology thought leaders, senior executives and telecom professionals from global carriers, industry associations, as well as other partner companies in the ecosystem, to exchange views on and collectively explore how ...
LRTV Custom TV
Realizing Operators' Digital Vision

12|16|14   |   5:23   |   (0) comments


Leveraging technology is fundamental to digital transformation but understanding customers and serving them really well is at the heart of digital businesses. TM Forum lists the following as the strategic pillars of the digital business: business agility and rapid innovation, operational agility and effectiveness, IT and data centricity, plus customer centricity. ...
LRTV Documentaries
US Cellular Injects Analytics Into LTE

12|16|14   |   2:57   |   (1) comment


US Cellular's Mario Vela explains how the operator uses analytics for network planning and what comes next as the carrier looks to eke more value out of its metrics.
LRTV Interviews
How Cox Biz Plans to Keep Growing

12|15|14   |     |   (2) comments


Steve Rowley, SVP of Cox Business, details how the third-biggest US MSO intends to boost its revenues to $2 billion and beyond over the rest of the decade
LRTV Huawei Video Resource Center
Interview With Bill Zhang, Director of SoftCOM Product Management, Huawei

12|15|14   |   2:50   |   (0) comments


Bill Zhang elaborated on Huawei's open philosophy in NFV solution development and network architecture design at the SDN & OpenFlow World Congress 2014.
LRTV Huawei Video Resource Center
Event Highlights: Huawei at SDN & OpenFlow World Congress 2014

12|15|14   |   3:43   |   (0) comments


Huawei joined the 2014 SDN & OpenFlow Congress as one of the key sponsors and contributors. At the event, Huawei reinforced the openness and flexibility of its network infrastructure strategies, and provided updates on its SDN and NVF innovations. Through participations at the exhibitions, forums and speeches, Huawei encouraged the industry to "think bigger and ...
LRTV Interviews
How Cable Biz Services Hit $10B Mark

12|12|14   |     |   (1) comment


Cable operators reached $10 billion in annual business services revenues by delving deeper into their vertical markets and expanding beyond the smallest firms.
LRTV Documentaries
Mediacom Aims to Test Connected Tractors

12|11|14   |   05:07   |   (3) comments


Cable business service provider is taking its services to the 'agribusiness' sector in partnership with farm equipment specialist John Deere and is getting involved in Gigabit Cities developments.
Upcoming Live Events
February 10, 2015, The Westin Peachtree Plaza, Atlanta, GA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Hot Topics
T-Mobile, BlackBerry Flirt With Reuniting
Sarah Reedy, Senior Editor, 12/17/2014
1-Gig: Coming to a Small Town Near You
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 12/17/2014
Comcast Launches 4K Streaming Service
Alan Breznick, Cable/Video Practice Leader, 12/18/2014
US Carriers, You're Going to Cuba!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 12/18/2014
Google Steering Android Towards Cars – Report
Dan Jones, Mobile Editor, 12/19/2014
Like Us on Facebook
Twitter Feed
Webinar Archive