Light Reading

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
The Swedish vendor has undergone a significant transformation during the past few years, adjusting to the demands of next-generation communications companies.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
LRTV Huawei Video Resource Center
Accounting for Better Solutions

4|10|15   |   02:31   |   (1) comment


Murad Yousuf, CTO at Saudi Arabia's Ministry of Finance (Dept. of Zakat & Income Tax), talks about the benefits of deploying router technology from Huawei.
LRTV Huawei Video Resource Center
What's in Store for Huawei & DataCore?

4|10|15   |   05:44   |   (0) comments


At the CeBIT trade show in Hannover, Germany, George Teixeira, CEO of software-defined storage (SDS) specialist DataCore Software, explains why he has just signed a partnership agreement with Huawei Technologies.
LRTV Huawei Video Resource Center
Du Puts Its Faith in Huawei's Routers

4|9|15   |   3:42   |   (0) comments


Adnan Masood, director of Enterprise MS Solutions Marketing at du, the United Arab Emirates (UAE) operator also known as Emirates Integrated Telecommunications Company, explains why his company chose to use Huawei's multifunctional AR routers as part of its managed enterprise services.
LRTV Huawei Video Resource Center
Huawei Gets Active in the Data Center

4|9|15   |   3:17   |   (0) comments


With enterprise users looking to maximize the use of their data center assets, Huawei’s Chief Architect & Technical Director of IT Data Center Solutions, Bruce Su, explains how the company's six-layer active-active data center solution is eradicating the need to deploy passive, redundant data center assets.
LRTV Huawei Video Resource Center
Blue Consult & Huawei for a Better Solution

4|8|15   |   4:01   |   (0) comments


Martin Rott, CEO, and Marc Metzler, head of sales virtualization, from Germany's Blue Consult discuss their collaboration with Huawei and TrendMicro to develop a secure, scalable IT platform that can meet the needs of the most demanding enterprise users.
LRTV Huawei Video Resource Center
Beach Petroleum on eLTE & Mining

4|8|15   |   3:09   |   (0) comments


Network systems integrator Jeremy Hamlyn explains how Huawei's secure packet-based trunking communications system, eLTE, can help remote communities and companies in the mining, oil and gas sectors, deploy efficient communications networks that are perfect for video and data as well as voice.
Upcoming Live Events
May 5, 2015, Hyatt McCormick Place, Chicago, IL
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
Network Instruments, a JDSU division, shares results from its 2015 State of the Network, a global survey on security.
Hot Topics
Verizon Scores New OTT Content Deals
Mari Silbey, Independent Technology Editor, 4/16/2015
Can WiFi Calling Find Its Voice?
Iain Morris, News Editor, 4/13/2015
Senator Proposes New 'Title X' for Net Neutrality
Carol Wilson, Editor-at-large, 4/13/2015
Nokia, Alcatel-Lucent in Merger Talks
Iain Morris, News Editor, 4/14/2015
Nokia & Alcatel-Lucent: What's Going On?
Ray Le Maistre, Editor-in-chief, 4/15/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Data Center Interconnect, or DCI, is one of the hottest sectors in telecom currently. Since coming back to Light Reading last year, prodigal-son style, I've ...
LR CEO and Founder Steve Saunders sits down with the head of Qosmos to talk about the changing state of the art in deep packet inspection technology, including its role in SDN and NFV architectures.
Cats with Phones
Steve's Phone Click Here
Steve Saunders's personal phone.