Private Equity Firms Gain Some Insight

Two private equity firms have inked a deal to buy a 42 percent stake in Insight Communications Co. Inc. , the ninth largest incumbent cable MSO in the US.

Financial terms were not disclosed, but Crestview Partners and MidOcean Partners are leading the investment group, which is purchasing the shares from The Carlyle Group LLC and other shareholders. (See Private Equity Firms Buy Into Insight.)

Once the deal is complete, Carlyle and the new investor group each will hold a 42 percent equity interest in the operator, with company management, employees, and other shareholders owning the rest. They expect to close the deal by the end of the second quarter.

The Carlyle Group helped take Insight private in 2005 under a deal that valued the MSO at $2.1 billion. In 2008, Insight and Comcast Corp. (Nasdaq: CMCSA, CMCSK) completed a deal that unwound a 50/50 partnership that gave Comcast complete ownership of several systems in parts of Indiana and Illinois. (See Insight Goes Private, Reports Q2, Comcast, Insight Close Deal, and Comcast, Insight Divvy Up Midwest.)

The current version of Insight has more than 716,400 basic customers in parts of Kentucky, Indiana, and Ohio. It reported 2009 revenues of $981.0 million, a 13 percent year-on-year increase. (See Insight Posts 2009 Results.)

The companies noted that Insight board chairman Sidney Knafel, "certain related holders," and MSO CEO Michael Willner will hold enough shares to enable them to elect a majority of Insight's board of directors. Insight's current management team is also remaining in place.

But the deal will give The Carlyle Group a partial, but still-undisclosed, return on its investment. Adding Crestview and MidOcean to Insight "will bring new perspective to our board as we position ourselves for a competitive and vibrant future," Willner said, in a statement.

The Insight agreement marks the latest cable deal for Crestview and MidOcean. They combined in 2005 to buy OneLink Communications of San Juan, Puerto Rico, and also played a key role in Charter Communications Inc. 's bankruptcy reorganization. (See Charter Leaves Chapter 11 .)

Jeffrey Marcus, a Crestview partner who heads the firm's Media and Communications Group, is a cable vet. In 1998, he sold Marcus Cable -- then the tenth largest US MSO -- to Microsoft Corp. (Nasdaq: MSFT) founder Paul Allen for $2.77 billion.

— Jeff Baumgartner, Site Editor, Light Reading Cable