Missouri-based Cableco Acquires then Deals Comcast Cable Assets in Indiana

NewWave Communications has expanded its cable footprint in Indiana and Illinois, acquiring systems from Comcast in a transaction that was initially reported on January 16th.  While neither company has released the terms of the deal, according to information on the Indiana Utility Regulatory Commission website, Comcast filed an application to transfer ownership of the systems to NewWave on January 6th.  According to the filings, the deal was reportedly set to close on, or around January 16th.

The ink was barely dry on the closing documents of its Comcast purchase before NewWave turned around and sold a portion of its newly acquired cable assets to Enhanced Telecommunications (ETC), a full-service telecom provider in Southeastern Indiana.  According to a press release on ETC’s website, it acquired former Comcast cable systems from NewWave located in Batesville, Brookville, Liberty and Flat Rock, Indiana. Last year, ETC received approximately $11m in grants and loans through the USDA’s Broadband Initiatives Program to build last mile wireless broadband infrastructure nearby these Indiana communities.

While NewWave wasted no time in flipping these systems in Indiana to ETC, the company will hold onto many of the properties it acquired from Comcast, including systems serving customers in Olney, DuQuoin, Pickneyville and Benton, Illinois. In addition to HD television service, NewWave will offer its new customers various bundles that include local and long distance telephone service and high speed Internet with speeds up to 50 Mbps downstream and 5 Mbps upstream.

Jim Gleason, ceo of NewWave, commented on its recent acquisition. “The opportunity to provide our services to these new areas is very exciting for us.  For the past 30 years, we have focused our efforts on serving smaller and mid-sized communities.  We think people who choose to live in smaller towns should have the same access to technology as people who live in bigger cities.”

For the Sikeston, Missouri-based NewWave, this latest purchase further consolidates its cable assets in the Midwest. Last year the MSO was involved in two of the years larger cable deals: acquiring Avenue Broadband from MCG Capital for $50.4m and selling its entire portfolio of Kentucky and Tennessee cable systems to Time Warner for $260m. NewWave picked up systems serving 20 Illinois and Indiana markets and approximately 19k customers through its Avenue Broadband acquisition.

Comcast, the leading cable provider in the U.S., has been relatively quiet on the cable M&A scene of late. Back in July, Comcast was rumored to be involved in the bidding for Charter’s Los Angeles cable system when it was up for auction, but Charter ultimately pulled the system off the block. The cable giant's last significant cable system purchase dates back to April 2007 when it acquired approximately 1.2m cable customers in Illinois and Indiana from Insight.

Though we do not know the financial terms of NewWave’s recent transactions with Comcast and ETC, the company was successful in buying low and selling high in its 2011 dealings. Though cable multiples continued to slip in 2011, NewWave fetched $3,714 per subscriber in its Time Warner sale, a multiple 40% above the average per sub price tag for deals we observed in 2011. It paid a significantly lower price of $2,667 per sub for Avenue Broadband.