Charter bags former Bresnan systems for $1.625B
Yesterday afternoon, Charter Communications, which is the nation’s fourth-largest cable operator, emerged as the sweepstakes winner for the former Bresnan systems with a winning bid to Cablevision of $1.625 billion.
The deal is slated to close in the third quarter of this year. Charter will fund the acquisition of Optimum West with $1.5 billion of committed bank financing to Charter Communications Operating and liquidity from cash on hand and its revolving credit facility.
"With this transaction, Charter will acquire some of the fastest-growing cable assets in the United States," said Tom Rutledge, Charter's president and CEO. "These former Bresnan properties operate in growing communities, and the network, employees and customer base have been well served for many years. In particular, over the past two years, Cablevision, as Optimum West, has grown video, Internet and telephone customers through the execution of a product and service strategy, which is the same as the one we recently implemented at Charter. Optimum West is an ideal fit for Charter, and we anticipate an efficient integration process."
Cablevision’s $1.65 billion deal to buy the Bresnan properties, which it subsequently renamed Optimum West, turned out to be a good investment and provided a nice cash infusion to the war chest for its continued battle with Verizon and the satellite providers in the New York metropolitan area.
Optimum West serves customers in Montana, where it has a master headend, and in Wyoming, Utah and Colorado.
"We are proud of the value we created in the Optimum West properties,” Cablevision President and CEO Jim Dolan said. “We made strategic investments in the cable system and significantly enhanced the network to provide our customers with more robust products and services. I am confident that our Optimum West team will continue to build on that success under new stewardship."
Cablevision, the nation’s fifth-largest cable operator, bought the Bresnan systems two years ago from Providence Equity Partners. Former Cablevision chief operating officer Tom Rutledge was in charge of the new Bresnan subsidiary at the time of the purchase, but he has since moved on to the CEO and president positions at Charter Communications.
Cablevision acknowledged that the tires were being kicked on Optimum West during its third-quarter earnings report but characterized the interest as unsolicited.
In addition to Charter, Time Warner Cable and Suddenlink Communications were also rumored to be potential buyers for Optimum West. Charter and Suddenlink were also reportedly interested in the Bresnan systems two years ago before Cablevision emerged as the winner.
Rutledge knows what he’s getting with Optimum West, and Charter has more experience serving far-flung rural areas than Cablevision.
Bresnan was formed in 2003 by cable pioneer Bresnan, who passed away in 2009. At the time of the Cablevision purchase, Bresnan served more than 320,000 basic subscribers in largely rural areas in Montana, Colorado, Wyoming and Utah, with a large hub in Montana serving as the focal point of its operations. Cablevision’s New York City metro area footprint is contiguous, while Bresnan’s was spread out among rural communities out West.
Cablevision added more HD channels to its Bresnan lineup and offered faster data speeds for customers that opted to switch to the Optimum brand, but it didn’t get DOCSIS 3.0 rolled out across all of the former Bresnan systems. Prior to the purchase, Prigash Pillai, a former Bresnan engineer that is now with Cablevision, said DOCSIS 3.0 was close to launching in the Bresnan systems.
Earlier this week, Charter announced it had hired two former Wall Street executives who had extensive merger and acquisition experience. Speculation followed that Charter brought the two execs onboard as a prelude to a possible purchase of its assets by Time Warner Cable, but Charter may be pursuing other deals of its own, including a swap of systems with Time Warner Cable.