Altice acquires Cablevision for $17.7bn
September 17, 2015
By Colin Mann
In a move that creates the number 4 cable operator in the US market, multinational cable, fibre, telecommunications, contents and media company Altice and Cablevision Systems Corporation have entered into a definitive agreement for Altice to acquire Cablevision. Under the agreement, Altice will deliver $34.90 (€30.82) in cash for each Cablevision share.
The acquisition of Cablevision represents Altice’s next step in the US market following the announced acquisition of Suddenlink earlier this year. Together, both operators represent the 4th largest cable operation in the US market.
Cablevision is the leading operator in the New York metropolitan area (New York, New Jersey, Connecticut) which represents the most attractive US cable market characterised by affluence and population density. With a network passing more than 5 million premises Cablevision serves more than 3.1 million residential and business customers. With approximately 65 per cent of its cable customers subscribing to triple-play services, Cablevision generates industry-leading ARPU and benefits from high customer loyalty.
Cablevision’s focus on service, innovation and investment provides a strong basis for extending its market leadership and growth momentum. Its first-in-class broadband network positions Cablevision well to provide next generation services to its customers while competing effectively in the marketplace.
The acquisition also includes:
Lightpath, the company’s business services unit
News 12 Networks ‘as local as local news gets’ is the first, largest, and most-watched 24-hour local television news network in the US, delivering local news to more than 3.7 million homes in the New York tri-state area
Newsday Media Group with Newsday, the Pulitzer Prize-winning newspaper distributing to over 1.8 million weeklies on Long Island, and amNewYork, the prominent free daily newspaper in the US with a circulation of approximately 300,000
Cablevision Media Sales, the company’s advertising sales division.
Cablevision generated $6.525 billion in revenue and $1.858 billion in AOCF on a consolidated basis for the 12 months period ended June 30, 2015. Cablevision’s cable and Lightpath businesses generated $6.206 billion in revenue and $2.005 billion in AOCF over the same period with a balanced mix between video, broadband, telephony and business services.
The acquisition of Cablevision by Altice represents an enterprise value of $17.7 billion and values Cablevision’s cable and Lightpath business at 6.1x synergy-adjusted AOCF.
As part of Altice, Cablevision will benefit from additional international operational expertise, enhanced scale and further investment support that are at the core of the Altice business model and strategy. While operating with independent capital structures, Cablevision and Suddenlink will draw upon management from both companies creating a leading communications services and technology group in the US market with 4.6 million customers in 20 states. Both companies will benefit from this national platform and from operating efficiencies and economies of scale.
Altice’s commitment to innovation, best-in-class services, long-term network investments and customer service creates significant benefits and long-term value for customers, employees and shareholders.
“As a family business we are proud to be entrusted by the Dolan family with the ownership of Cablevision and look forward to continuing the pioneering path they have paved for us,” said Patrick Drahi, Founder and President of Altice. “The strategy of Altice in the large and highly strategic US market is reinforced with the acquisition of Cablevision. We will be in a stronger position, as in all other markets in which we operate, to deliver the best services, invest in the most advanced technology, and develop innovative products for the benefit of our customers.”
“We are very excited about our acquisition of Cablevision, which has developed into a pre-eminent cable operator under the steady, long-term ownership of the Dolan Family,” stated Dexter Goei, CEO of Altice. “This acquisition, our second in the cable sector in the US, is the next step in Altice’s long-term oriented strategy in the US, one of the largest and fastest growing communications markets in the world.”
Cablevision Chief Executive Officer James L. Dolan issued the following statement on behalf of the Dolan family:
“Since Charles Dolan founded Cablevision in 1973, the Dolan family has been honoured to help shepherd our customers and employees through the most extraordinary communications revolution in modern history.
Now, nearly half a century later, the time is right for new ownership of Cablevision and its considerable assets. We believe that Patrick Drahi and Altice will be truly worthy successors, and we look forward to doing all we can to affect this transition for our customers and employees. We expect that Cablevision will be in excellent hands.
For the Dolan family, we move forward with AMC Networks and The Madison Square Garden Company – two and, eventually, three public companies – all born of Cablevision and each with brighter prospects today than ever before.
With profound gratitude to our employees, customers and shareholders who have made our vision a reality, the Dolans look forward to continuing this fascinating journey.”
Holders of shares representing a majority of the outstanding of voting power of Cablevision delivered written consents approving the transaction. The announced transaction is not subject to further shareholder approval.
The transaction is to be financed with $14.5 billion of new and existing debt at Cablevision, cash on hand at Cablevision and $3.3 billion of cash from Altice. BC Partners and CPP Investment Board have an option to participate for up to 30 per cent of the equity of Cablevision. Altice intends to raise equity by issuing Class A shares in connection with funding its portion of the acquisition. Altice has received full financing commitments from JP Morgan, BNP Paribas and Barclays.
The announced transaction is expected to close in the first half of 2016 once applicable regulatory approvals have been obtained.
JP Morgan, BNP Paribas and Barclays acted as financial advisors to Altice. Shearman & Sterling, Covington & Burling, Mayer Brown, Ropes & Gray, De Brauw Blackstone Westbroek and Morris Nichols Arsht & Tunnell acted as legal advisors to Altice.
SNL Kagan’s Ian Olgeirson notes that Altice has been vocal about its appetite for US cable operators. “The purchase price falls within our expected parameters and catapults Altice into the No. 5 spot among cable operators with 3.74 million video subs. In the broader US multichannel picture, the combined companies would crack the top 10 but control less than 4 per cent of the overall video subscription share,” he advised.