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Cox pacts to buy bulk of Vegas cable outfit

$1.325 bil changes hands in deal

FROM NCTA
Cox Communications Inc. entered “mega-cluster” into the lexicon Tuesday on announcing a definitive agreement to buy an 80% stake in Las Vegas-based cabler Prime South Diversified Inc. for $1.325 billion in stock and cash.

The Atlanta-based cabler coined the term in reference to the entity formed by adding Las Vegas to its current operations in Phoenix, San Diego and Orange County. Cox will leave 20% of Prime South with Las Vegas’ Greenspun family, the owner of the Las Vegas Sun and current majority owner of PSDI.

Prime Cable of Austin, Texas, and several institutional investors will be bought out by the deal, which, in addition to PSDI’s 319,000 residential cable customers, encompasses the 105,000 hotel units of PSDI’s Hospitality Network Inc., its multiple-dwelling-unit video provider PrimeTel of Nevada, its 35% interest in telecom exchange NextLink Nevada, and its 33% interest in 24-hour TV news operation Las Vegas One.

Joining cluster

Cox CEO Jim Robbins defined “mega-cluster” in the context of the 2.2 million homes that Cox already passes in Southern California and Arizona. “This addition of another 506,000 residential homes passed in the fastest-growing metropolitan area of the U.S. makes us the premiere provider of advanced video, voice and data services in the region,” he said.

Cox spokesman David Andersen added that the term’s marketing implications were at least as profound. “Many of the people who already live in the cluster go to Las Vegas,” he said, “so it has lots of meaning in terms of cross-promotion and advertising.”

Sale no surprise

Although the sale of PSDI to Cox had been expected, most anticipated versions were more complicated than the 80/20 ownership agreement ultimately reached.

Salomon Smith Barney assisted Cox on the buy side of the deal, while Daniels & Associates represented the sellers. The Greenspun family was advised by Goldman Sachs.

Publicly traded Cox Communications, which already 3.3 million cable customers nationwide, is also an equity partner in Sprint PCS and an investor in such programming networks as the Discovery Channel.