Influential Gotham investment firm Quadrangle said Tuesday it’s investing $150 million in small St. Louis-based cabler Cebridge, which will acquire about 1.2 million subscribers from Cox and Charter to boost itself into the top 10.
Cebridge, run by longtime cable exec Jerry Kent, will also change its name.
Quadrangle, the firm launched in 2000 by former Lazard heavyweight Steven Rattner, will end up owning 17% of Cebridge and two of 11 seats on the board. It will join Cebridge’s other investors including Goldman Sachs and Oaktree Capital.
Kent’s holding Cequel created Cebridge in 2003 out of bankrupt St. Louis cable company Classic Communications, which had about 325,000 subs in Texas, Kansas, Oklahoma, Missouri, Arkansas, New Mexico, Ohio and Colorado. In the latest transaction, it will pick up 869,000 subs from Cox Communications and 240,000 from Charter Communications, a company Kent co-founded in 1993. It was purchased by Paul Allen in 1998.
Quadrangle Capital Partners manages more than $2.6 billion in investments focused on media and communications.
“Quadrangle’s investment reflects a strong endorsement of the future of our business,” said Kent.
Cable has been under the gun for the past year or more as investors feared growing competition from telecom companies and satcasters. Some Time Warner investors, for instance, have been rooting for the conglom’s acquisition of Adelphia Communications to fall through.
However, many continued to see value in cable pipes as the best way into peoples’ homes. The positive view has been endorsed in recent months by the successful rollout of telephone service by major operators. And many expect a round of vigorous consolidation in the industry.
“We are confident that the company’s assets, which hold leadership positions in less competitive non-urban markets, represent a terrific opportunity for growth,” said Quadrangle principal Jeffrey Nordhaus.