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Analyst Sounds Warning on Altice/Cablevision Deal

While the cable industry's focus is on Charter's proposed merger with Time Warner Cable (and Bright House Networks), financial analyst Craig Moffett has a word of caution on another transaction in the works -- the plan by French company Altice to acquire Cablevision.

Moffett isn't worried about antitrust issues with Cablevision Systems Corp. (NYSE: CVC). Instead, he's wary that the Altice deal might not get approval at the state and local level.

"I'm not entirely persuaded that either the New York City Mayor's office, or that the New York State Public Service Commission will find that an Altice transaction for Cablevision is in the public interest," said Moffett in a discussion at Light Reading's The Future of Cable Business Services event.

Moffett went on to enumerate the reasons Altice might not get approval for the deal. In order for the acquisition to be in the public interest, it should be good for jobs, good for consumer pricing, good for capital investment and good for service levels. It also shouldn't be financed too heavily with debt, which could make it difficult for Cablevision to retain its value and put company shareholders at risk.

On all counts, according to Moffett, the Altice transaction fails to meet public interest standards.

"Now maybe they can square the circle by just making concessions. And maybe it's just blustering by the New York Public Service Commission, but it's not obvious to me anyway that, even though there are no antitrust issues in this case, that this is going to breeze through the state and local authorities," said Moffett.


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Moffett said he doesn't see significant challenges to Altice's other planned stateside acquisition of Suddenlink Communications noting, "I don't think there's any reason to think the Altice/Suddenlink transaction faces any particular peril."

On another positive note, the analyst also reiterated his position that Charter Communications Inc. is likely to get regulatory approval on its bid to buy Time Warner Cable Inc. (NYSE: TWC) and Bright House Networks .

"I formally have an 80-20 probability on the deal, but I think it's probably materially higher than that," Moffett stated. "The pushback that we're hearing in Washington is an order of magnitude less than it was in the Comcast transaction."

In other words, the game-changing Charter deals might be far less worrisome to regulators than some in the industry expect. (See Fresh Opposition Threatens Charter Deals.)

However, public interest issues in New York could leave Cablevision out in the cold.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

KBode 12/3/2015 | 4:24:25 PM
Re: Local Regulatory Snags I know states are pushing back a little against the Charter deal, but these deals almost always get done in the end with a few winks. Often it just winds up being a lateral move with the benefit being the company that's buying actually wants to be in the business, while the other no longer does.

Altice has a bit of a reputation for being a little to aggressive at cutting costs, so I'm curious why they find a market where they'll have to compete with Verizon FiOS so appealing, but it's going to be interesting to watch.
alanbreznick 12/3/2015 | 2:03:10 PM
Local Regulatory Snags Pretty interesting. I don't know if state or lcal regulators have ever stopped a deal like this before. I wonder what kinds of concessions from Altice might be necessary to push the deal thru. 
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