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Entries in Cablevision Systems:CVC (5)


Altice Pays $17.7b for Cablevision, Doubles Down on U.S. Cable

French telecom firm Altice announced on Thursday, September 17th that it had agreed to acquire Cablevision Systems Corporation (NYSE:CVC) at a headline price of $17.7b, or $34.90 per share.  The deal comes on the heels of Altice’s May purchase of Suddenlink for $9.1b, which marked its entrance into the U.S. cable market.  The combination of Suddenlink and Cablevision represents the 4th largest cable operator in the U.S. and continues the trend of large-scale M&A amongst U.S. cable operators.

Valuation Analysis and Deal Metrics

Transaction Facts

  • BC Partners and CPP Investment Board, from which Altice acquired its 70 percent stake in Suddenlink,  have an option to participate for up to 30 percent of the equity of Cablevision
  • $900m in annual synergies anticipated  
  • Expected close 3Q16-4Q16

Strategic Considerations

  • Provides greater scale to realize cost synergies across Suddenlink and Cablevision
  • 65 percent take rate of triple play services drives industry-leading ARPU of $155
  • Highly competitive network that is 100 percent digital, offering triple play--video, broadband and VoIP—throughout service area

JSICA’s Take

After Altice scooped up Suddenlink in May, we indicated that more U.S. cable deals were on the horizon for the acquisitive French telecom giant.  Cablevision, an oft-rumored takeover target in recent years, was a logical target.  At multiples of 2.8x trailing revenue and 6.9x pro forma EBITDA, Cablevision was less expensive than Suddenlink (3.9x revenue/8.1 pro forma EBITDA)—the discount largely attributable to Cablevision’s inability to deliver meaningful revenue and EBITDA growth over the past five years.

Existing high penetration rates and strong in footprint competition from Verizon will make it challenging for Altice to accelerate Cablevision’s top line growth, but founder Patrick Drahi is confident that between network modernization, the streamlining of operations and consolidation of management, there is ample room for cost savings--$900m worth to be exact.

The deal marks continued consolidation of U.S. cable/broadband providers in 2015, particularly amongst mid-sized operators.  Deal multiples averaging a lofty 3.6x revenue and 8.0x pro forma cash flow could entice the remaining regional/mid=sized cablecos to sell.  And with Altice looking to increase its overall revenue mix to 50 percent from its U.S. operations, there is at least one motivated buyer in the market. 


Cablevision Reports 4Q and 2010 Results

Source: Cablevision Press Release

Cablevision Systems Corporation (NYSE:CVC) reported financial results for the fourth quarter and full year ended December 31, 2010. Fourth quarter consolidated net revenues grew 5.7% to $1.869 billion compared to the prior year period. Consolidated adjusted operating cash flow (“AOCF”) grew 2.3% to $631.7 million and consolidated operating income grew 1.6% to $355.9 million, both compared to the prior year period. Fourth quarter 2010 results reflect the newly acquired Bresnan properties from the date of acquisition on December 14, 2010 including a $14.4 million contract termination charge. Revenue, AOCF and operating income growth compared to the prior year period would have been 4.5%, 3.4% and 5.6%, respectively, if Bresnan results were excluded.

For full year 2010, consolidated net revenues increased 5.6% to $7.231 billion, reflecting revenue growth in Telecommunications Services and Rainbow. Consolidated AOCF grew 5.6% to $2.581 billion and consolidated operating income grew 13.1% to $1.529 billion for full year 2010. Excluding the impact of Bresnan discussed above, net revenue, consolidated AOCF and operating income would have grown 5.3%, 5.9% and 14.2%, respectively, compared to the prior full year period.


Cablevision Completes Bresnan Acquisition

Source: Cablevision Press Release

Cablevision Systems Corporation (NYSE:CVC) today announced that it has completed its acquisition of Bresnan Communications through a newly-formed subsidiary. With the completion of this transaction, Cablevision adds systems serving approximately 297,000 basic cable television subscribers and more than 629,000 homes passed in Montana, Wyoming, Colorado and Utah to its New York-area cable system and operations.

The Bresnan acquisition is structured as a newly-formed, independent, unrestricted subsidiary of Cablevision. The transaction was valued at $1.365b, subject to certain adjustments, and was financed using an equity contribution by Cablevision of approximately $400m and non-recourse debt of approximately $1b. The newly-formed subsidiary's capital structure consists of a $75m Revolving Credit Facility, a $765m Term Loan Facility and $250m 8.0% Senior Notes due 2018. Neither Cablevision nor any of its subsidiaries, other than the newly-formed subsidiary, will have any obligations or liability with respect to the new credit facility or Senior Notes.


Cablevision Announces Possible Rainbow Spin-off

Source: Cablevision Press Release

Cablevision Systems (NYSE:CVC) today announced that its board of directors has authorized the company’s management to explore a potential leveraged spin-off of its Rainbow Media Holdings business to Cablevision’s stockholders, which would be structured as a tax-free pro rata distribution to stockholders. In addition, the Board has approved filing the necessary documents with the Internal Revenue Service (IRS) to seek a private letter ruling with respect to the transaction’s tax-free status. If the transaction moves forward, it is anticipated that a new, public Rainbow company would include: 

  • National programming networks: AMC, WE tv, IFC, Sundance Channel and Wedding Central
  • IFC Entertainment, an independent film business that consists of multiple brands – including IFC Films, IFC Productions and the IFC Center -- devoted to bringing the best of specialty films to a large audience
  • Rainbow Network Communications (RNC), a full service network programming origination and distribution company, supplying an array of services to the cable, satellite and broadcast industries
Businesses that are expected to remain a part of Cablevision, should the Rainbow spin-off occur, include the cable and telecommunications business, Newsday, News 12 Networks, MSG Varsity and Clearview Cinemas. The company would target mid-year 2011 for completion of the proposed spin-off, which is subject to a number of factors, including receipt of a private letter ruling from the IRS and approval by the board of directors. Cablevision notes that there can be no assurance that a transaction will be consummated.

NCTA Names Cable Behemoths to Head its Board

Source: NCTA Press Release 

Pat Esser, president of Cox Communications, was elected as chairman of the board of directors of the National Cable & Telecommunications Association (NCTA). In addition, Glenn Britt, chairman, president & ceo, Time Warner Cable, was elected vice chairman; Brian Roberts, chairman & ceo, Comcast Corporation, was elected treasurer; and Abbe Raven, president & ceo, A&E Television Networks, was elected Secretary.

The NCTA Board established its Executive Committee for 2010-2011. It includes Tom Rutledge, coo, Cablevision Systems Corporation, as the immediate past chairman of the NCTA Board, the above named Officers, and NCTA president & ceo Kyle McSlarrow in an ex officio role. The following were also named to the Executive Committee:

  • Rocco Commisso, chairman & ceo, Mediacom Communications Corporation
  • Philippe Dauman, president & ceo, Viacom
  • Ronald Duncan, president & ceo, GCI
  • Jerry Kent, chairman & ceo, Suddenlink Communications 
  • Mike Lovett, president & ceo, Charter Communications
  • Bob Miron, chairman, Advance/Newhouse Communications
  • Michael Willner, vice chairman & ceo, Insight Communications

Other Board elections included:

  • Associate Director: Frank Drendel, chairman & ceo, CommScope, was reelected to serve a two-year term.
  • At-Large Programmer Directors: Ken Lowe, chairman of the board, president & ceo, Scripps Networks Interactive; Matt Blank, chairman & ceo, Showtime Networks, Inc.; and Judy McGrath, chairman & ceo, MTV Networks, were elected to serve two-year terms.
  • At-Large System Directors: Ronald Duncan, president & ceo, GCI; and Jim Pearson, president & ceo, U.S. Cable Corporation, were reelected to serve three-year terms.
  • Rural/Small System Director: In March 2010, Richard Sjoberg, president & ceo, Sjoberg’s Inc., was reelected as a Rural/Small System Director for another two years.
  • Amy Tykeson, ceo, BendBroadband, was named chair of the Rural/Small System Operators’ Committee for another two-year term. 

Other directors were not subject to reelection.