Comcast Corp. got a lot bigger Tuesday, agreeing to buy Lenfest Communications and its 1.25 million cable subscribers for about $6.6 billion in stock and assumed debt.
Lenfest, the nation’s ninth biggest cable operator, is jointly owned by AT&T Corp. and the Lenfest family. Its sale to Comcast fulfills a deal the Philadelphia cabler struck with AT&T earlier this year when the two were both bidding for MediaOne Group. The giant telco offered Comcast a three-year option to buy 1.25 million AT&T subs for $5.7 billion.
The deal also supersedes a previous agreement under which AT&T would buy the Lenfest family’s interest in Lenfest Communications.
The purchase calls for Comcast to pony up 116 million Class A special shares — worth about $5.1 billion at their current market price — and assume $1.5 billion in Lenfest debt.
Comcast shares jumped 6.5% on the news to $44.
The purchase expands the company’s already heavy grip on the mid-Atlantic cable market. Lenfest’s systems run through southeastern and central Pennsylvania, southern New Jersey and northern Delaware. The transaction also includes cable advertising firm Radius Communications and news programmer Tri-State Media.
“Comcast views the geographic consolidation of the Philadelphia marketplace as critically important to the company’s future,” said prexy Brian Roberts.
The Lenfest deal will also create the largest and most concentrated broadband operation in the U.S., Roberts added, noting that online and digital services will each generate an estimated $100 million in revenues next year. Comcast’s high-speed service Comcast@Home will have 145,000 customers by the end of this year in a footprint of 3.5 million homes.
Roberts made some of his comments during a conference for investors in Philadelphia. He said the company plans $750 million in capital spending this year and $1 billion in 2000, with the cash flowing mainly to recently acquired or swapped cable systems and to expanding the distribution facility of home shopping network QVC.
Wall Streeters and other industry players consider Comcast among the nation’s best managed and best clustered cable companies. Counting all pending acquisitions, Comcast will have doubled its subscribers to 8.2 million by the middle of 2000 from the year earlier. Some 85% of its cable business will be located in six regional clusters.
The company’s other assets include majority chunks of QVC and E! Entertainment Television cable nets as well as Comcast SportsNet and the Golf Channel.
Comcast’s May 1999 agreement with AT&T would allow AT&T to buy back up to 1.25 million subscribers from Comcast if the AT&T/MediaOne merger fails to close and the Comcast/Lenfest deal goes through. Both deals are expected to close in the first quarter of next year, although the AT&T/MediaOne combination is facing tough regulatory scrutiny and may be forced to shed some systems.
Separately, Comcast and Time Warner said they have agreed to swap Comcast’s Lake County and Tallahassee, Fla., cable systems for a Time Warner system in Indianapolis.