You will be redirected back to your article in seconds

France’s Altice Group Has Aggressive Plan for Cablevision

Just when the cable guys thought they’d identified all the exigent threats to the traditional pay TV business, a savvy French telecom tycoon has parachuted onto the battlefield with visions of grandeur.

Patrick Drahi, founder of Netherlands-based cable and telecom provider Altice Group, surprised the TV biz on Sept. 17 by unveiling a rich $17.7 billion acquisition agreement with Cablevision, an old-guard cable player still controlled by its founding family, the Dolan clan. Drahi has been on a tear in France and Europe during the past two years, scooping up some $40 billion in cable, wireless and telecom assets. His strategy is to turn his company into an essential household utility by offering consumers a “quad play” of one-stop shopping for video, broadband, wireless telecom and land-line telephone services.

Altice’s play, which would turn it into the fourth-largest U.S. cable operator, is a clear signal that Drahi aims to extend his vision across the Atlantic. And that means he’s probably just getting started shopping for U.S. media assets. Hollywood is paying attention, especially because of Altice’s reputation for driving hard bargains in programming deals. In announcing the Cablevision pact, Altice promised to squeeze $900 million in savings out of the company.

“This can only accelerate consolidation among the programmers,” MoffettNathanson analyst Craig Moffett wrote. “It is reasonable to guess that Altice will be a very aggressive negotiator, and will be willing to drop networks if necessary … in order to preserve margins.”

Drahi began his quest to conquer America in May, when he made a $9.1 billion deal to acquire 70% of St. Louis-based midsized cable operator Suddenlink. That agreement got watercooler attention in the U.S., but nothing like the response to the pact for Cablevision, which has about 2.8 million subscribers in some of the most desirable markets in the U.S. — the New York tri-state area.

As Altice surveys the field, the prices for the few remaining independent cable operators of any size just went up. Cox Communications, Mediacom and Cable One are seen as prime targets for the soon-to-merge (or so they hope) Charter Communications and Time Warner Cable.

The Dolans’ decision to sell to Altice carries heavy symbolism at a time when the U.S. pay TV market is roiling from competitive threats from seemingly every direction. Netflix, Hulu and other streaming-only platforms are siphoning customers away from the core video business. The prospect of Apple, Google or Facebook harnessing their enormous user bases to distribute channels in a cable-like fashion casts another shadow on the marketplace.

That fear has driven the burst of M&A activity among cable operators under the assumption that bigger providers will have the clout and resources to better adapt to a world in which profits come largely from broadband and telephony services rather than channel packages. Already there’s chatter of Altice going after a wireless firm like Sprint or T-Mobile to further its quad-play strategy.

Founded in 2002, Altice has its roots in the traditional wired world. After launching two cable companies in Europe, Drahi himself is said to have done the grunt work of installing service in his early days, and he considers cable titan John Malone a mentor through their encounters in Europe over the years. But the sale of a pioneering operator like Cablevision to a foreign conglomerate is indicative of the global scope of today’s big media players — a far cry from Charles Dolan’s humble beginnings on Long Island with 1,500 subscribers in 1973. The jousting with upstart competitors and the pressure to grow or die was becoming overwhelming.

Drahi has a vision, but there’s skepticism about whether he’ll have the time to pull it off before the debt load he’s piled up becomes crushing. There’s no question he’s paying top dollar to snare Cablevision, which will place a further drag on Altice’s balance sheet. Drahi reinforced his reputation as a ruthless cost-cutter in remarks following the Cablevision announcement, when he told Wall Streeters he was dismayed to learn that Cablevision had 300 employees making $300,000 or more a year.

“This we will change,” he said at the Goldman Sachs investor conference on Sept. 17. “I don’t like to pay salaries. I pay as little as I can.”

Altice’s bravado sets up a horse race with Charter Communications, which has its eye on further acquisitions once its $56 billion purchase of Time Warner Cable is locked up. But Drahi has a big head start, since Charter probably won’t be finished with the slog of federal approvals on Time Warner Cable until early next year.

“The window for industry consolidation is narrowing,” wrote Amy Yong, analyst at Macquarie Capital. “Altice’s interest is one centered around cheap financing and cost cutting.”

More Biz

  • Lisa Borders Time's Up

    Time's Up President Lisa Borders Resigns

    Lisa Borders has resigned as president of Time’s Up, she and the organization announced on Monday. Borders is resigning due to family issues, she said in a statement. Time’s Up COO Rebecca Goldman will now serve as interim CEO. “As Time’s Up continues to grow, I am proud of the work I have done to [...]

  • Jussie Smollett Good Morning America

    Jussie Smollett Angrily Denies Complicity in Attack

    Attorneys for “Empire” actor Jussie Smollett issued a statement Saturday denying that he orchestrated his Jan. 29 assault, and saying he is “angered” and “devastated” by recent developments in the case. Chicago police want to interview Smollett, after learning new evidence from two Nigerian brothers who were released on Friday night. Local media outlets have [...]

  • Walt Disney Archives Founder Dave Smith

    Walt Disney Archives Founder Dave Smith Dies at 78

    Walt Disney Archives founder Dave Smith, the historian who spent 40 years cataloging and preserving the company’s legacy of entertainment and innovation, died Friday in Burbank, Calif. He was 78. Smith served as Disney’s chief archivist from 1970 to 2010. He was named a Disney Legend in 2007 and served as a consultant to the [...]

  • Colin Kaepernick Kneel

    Colin Kaepernick, Eric Reid Reach Settlement With NFL

    Colin Kaepernick and Eric Reid, two football players who alleged the National Football League colluded to oust them from the game after they started kneeling in protest of racial inequality during the playing of the national anthem, have reached a settlement in the matter, according to a statement from the sports organization and lawyers representing [...]

  • R. Kelly

    R. Kelly Could Be in ‘Big Trouble’ Over Alleged New Sex Tape, Attorney Says

    Strong allegations of sexual misconduct have followed R. Kelly for 25 years, but the singer has always managed to slip free. Yet reports that a videotape of him sexually assaulting an underage girl, combined with the outcry surrounding the Lifetime documentary “Surviving R. Kelly,” means that public sentiment, at the very least, is definitely not [...]

  • Christian Bale as Dick Cheney in

    New Media Residuals and Feature Films Contribute to Spike in Writers' Pay

    The outlook for members of the Writers Guild of America has brightened — even amid pervasive uncertainty in the entertainment industry. According to the most recent report to WGA West members, earnings surged 2.8% to $1.41 billion in 2017, thanks mostly to gains in feature films and new-media residuals. Total covered earnings for WGA West [...]

  • Joe Dante Gremlins

    Hollywood Execs Seek Licensing Deals at the New York Toy Fair

    On Feb. 16 more than 30,000 studio executives, buyers and toy company reps will gather in Manhattan for the annual Toy Fair New York, all vying for market share and trying to snag the latest hot trend in a fast-changing industry. Those working the film side of the business will focus much of their attention [...]

More From Our Brands

Access exclusive content