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Is Insight Off the Block?

The Carlyle Group LLC reportedly has taken Insight Communications Co. Inc. off the deal table in the midst of tough debt markets and an inability to secure a desired price for the New York-based MSO.

According to the Wall Street Journal, bids for Insight were roughly $200 million short of an expected range of $2.5 billion to $3 billion.

The decision to put the auction on hold is not a big surprise after the credit markets went haywire in July and a private equity deal became less and less of a viable bet, says Craig Moffett, a senior analyst with Sanford C. Bernstein & Co. Inc.

"It has been heading in this direction for a while," he says.

In May, Insight hired Morgan Stanley and Waller Capital Corp. to advise the MSO of its options. In addition to a sale, the operator was said to be looking to buy companies, though that scenario was viewed as the most unlikely of the two after Insight finalized a deal to hand over control of systems passing 1.2 million homes in the Midwest to Comcast Corp. (Nasdaq: CMCSA, CMCSK). Once that deal is closed, Insight will still operate systems passing 1.3 million homes in Kentucky (Louisville, Lexington, Bowling Green, and Covington); Evansville, Ind.; and Columbus, Ohio. (See Is Insight on the Block? and Comcast, Insight Divvy Up Midwest.)

In early August, Time Warner Cable Inc. (NYSE: TWC) confirmed it would be among the bidders for Insight, whose remaining systems cluster nicely with Time Warner Cable's. (See Time Warner Seeking Insight .)

In mid-August, Insight CEO Michael Willner said the company had not completed its review, and he declined to comment on the situation beyond that. (See Insight Still Weighing Options .)

Insight was not immediately available for comment.

Although Insight appears to be off the table for the moment, the move is "likely a temporary retreat until the credit markets stabilize," Moffett says, noting that he doesn't believe Carlyle will want to hold the Insight assets for the long-term, particularly after the unwinding of the Comcast partnership.

Moffett adds that The Carlyle Group is not selling Insight under duress, pointing to the MSO's recent solid quarterly results. (See Insight Revenues Rise.)

Insight went private in 2005, merging with Insight Acquisition Corp., an entity headed by The Carlyle Group and Insight co-founders Sidney Knafel and Michael Willner.

— Jeff Baumgartner, Site Editor, Cable Digital News

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