Company to pay $1.4 bil to expand its reach
Cablevision Systems Corp. said Monday it will pay $1.4 billion to expand far beyond its focus in the New York City area with the purchase of Bresnan Communications, a mid-sized cable TV provider in the West.
Cablevision will borrow most of what it needs to fund the deal, which comes at a steep price and casts some uncertainty over the widespread belief that Cablevision has been priming itself for a sale. Cablevision spun off its Madison Square Garden business in February, and acquiring another business typically isn’t something a company for sale would do.
Cablevision, which also owns the AMC, IFC and Fuse cablers, signaled it does not plan to go on a buying spree of other cable systems by announcing Monday that it plans to buy back $500 million worth of its shares.
Cablevision is “not in the market for any company or cable system that may eventually be for sale,” CEO Jim Dolan said in a conference call with financial analysts to discuss the deal.
Bresnan has more than 300,000 customers in Colorado, Montana, Wyoming and Utah. It is majority owned by Providence Equity Partners, which bought Bresnan in 2003 from Comcast Corp. for $525 million.
Analysts said Cablevision is paying dearly. Jeff Wlodarczak, an analyst at Pivotal Research Group., said the price amounts to 8.5 times Bresnan’s earnings before interest, taxes, depreciation and amortization. On average, publicly traded cable companies trade at 5.8 times adjusted earnings.