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
LRTV Documentaries
Sprint's Network Evolution

7|24|14   |   14:59   |   (0) comments


Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
LRTV Documentaries
BTE Keynote: The Software-Defined Operator

7|24|14   |   18:43   |   (1) comment


Deutsche Telekom's Axel Clauberg explains the concept of the software-defined operator to the Big Telecom Event (BTE) crowd.
Light Reedy
Numbers Are In: LR's 2014 Salary Survey

7|24|14   |   1:25   |   (6) comments


Our fourth annual Salary Survey paints a picture of who's hiring, firing, earning, and yearning for a change in the telecom industry.
LRTV Custom TV
Driving the Network Transformation

7|23|14   |   4:29   |   (0) comments


Intel's Sandra Rivera discusses network transformation and how Intel technologies, programs, and standards body efforts have helped the industry migration to SDN and NFV.
LRTV Custom TV
Distributed NFV-Based Business Services by RAD

7|18|14   |   5:38   |   (0) comments


With the ETSI-approved Distributed NFV PoC running in the background, RAD's CEO, Dror Bin, talks about why D-NFV makes compelling sense for service providers, and about the dollars and cents RAD is putting behind D-NFV.
LRTV Custom TV
MRV Accelerating Packet Optical Convergence

7|15|14   |   6:06   |   (0) comments


Giving you network insight to make your network smarter.
LRTV Custom TV
NFV-Enabled Ethernet for Generating New Revenues

7|15|14   |   5:49   |   (0) comments


Cyan's Planet Orchestrate allows service providers and their end-customers to activate software-based capabilities such as firewalls and encryption on top of existing Ethernet services in just minutes.
LRTV Custom TV
Symkloud NVF-Ready Video Transcoding, Big Data

7|9|14   |   3:41   |   (0) comments


Kontron and ISV partner Vantrix demonstrate high-performance video transcoding and data analytic solutions on same 2U standard platform that is ready for SDN and NFV deployments made by mobile, cable and cloud operators.
LRTV Huawei Video Resource Center
The Evolving Role of Hybrid Video for Competitive Success

7|4|14   |   4:09   |   (0) comments


At Huawei's Global Analysts Summit in Shenzhen, China, Steven C. Hawley from TV Strategies speaks to us about the evolving role of hybrid video for competitive success.
LRTV Huawei Video Resource Center
How CSPs Leverage Big Data in the Digital Economy

7|4|14   |   4:48   |   (2) comments


Justin van der Lande from Analysys Mason shares with us his views on how telecom operators can leverage customer asset monetization with big data. His discusses the current status of big data applications and the challenges and opportunities for telecom operators in the digital economy era.
LRTV Huawei Video Resource Center
Accelerator for Digital Business Future Oriented BSS

7|4|14   |   3:08   |   (0) comments


Mobile and internet are becoming intertwined; IT and CT are integrating; and leading CSPs have begun to transform to information service and entertainment providers. How should the BSS system evolve to enable this transformation? Karl Whitelock, an analyst at Frost & Sullivan, shares his views.
LRTV Huawei Video Resource Center
Orange Tunisia Discusses Multi-Band Antenna With EasyRET Solution

7|4|14   |   2:45   |   (0) comments


As new site acquisition becomes more difficult, Orange Tunisia has requested multi-band antenna to support UMTS and LTE innovation. Some things considered include reducing the cost of antenna maintenance and having high reliability antenna and EasyRET solution.
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Packet Design asks network professionals how they handle the cloud, SDN, and network management.
Hot Topics
The Municipal Menace?
Jason Meyers, Senior Editor, Utility Communications/IoT, 7/22/2014
Cisco Puts a Fog Over IoT
Sarah Reedy, Senior Editor, 7/23/2014
Apple Earnings: Strong iPhone Sales, iPad Sales Slump, $7.8B Profit
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/22/2014
Salary Survey Report 2014
Sarah Reedy, Senior Editor, 7/23/2014
Facebook: 30% of Users Are Mobile-Only
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/24/2014
Like Us on Facebook
Twitter Feed