Charter closes deal to buy former Bresnan systems from Cablevision
Charter Communications has wrapped up is $1.62 billion purchase of Cablevision’s Bresnan Broadband Holdings, which the latter called Optimum West.
The immediate result is that Charter, which is the nation’s fourth-largest cable operator, has added systems in Colorado, Montana, Wyoming and Utah that pass more than 660,000 homes and serve 375,000 residential and business customers.
"With the completion of our acquisition of Optimum West, Charter welcomes new customers, new employees and new communities," said Tom Rutledge, Charter's president and CEO. "These former Bresnan properties, which under Cablevision's leadership became some of the fastest growing cable properties in the United States, are an ideal fit for Charter, and we anticipate a smooth and efficient integration process."
The deal, which was announced in February, was originally slated to close in the third quarter of this year. Charter funded 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.
Charter didn’t say Monday how it will go about integrating the former Optimum West systems, but Charter CFO and EVP Christopher Winfrey said on company’s first quarter earnings call earlier this year the systems were a good fit.
“I think the reality is it's operated in a way that Charter's operating its plant today and it's going to market the same way that we do,” Winfrey said. “And so we think it's going to fit very well, so it's less about trying to drive the cost synergies and more about trying to grow the business and grow penetration and grow the amount of ARPU.”
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.
Rutledge knew what he was buying with Optimum West, and Charter has more experience serving rural areas than Cablevision.
Bresnan was formed in 2003 by cable pioneer Bill 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 former 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
More deals in the works for Charter?
With the rumor mill reaching the melting point, the bigger question now is whether Charter has the gravitas to go after Time Warner Cable, and/or Cablevision. John Malone’s Liberty Media now owns a 27 percent stake in Charter, and Malone has recently referred to Charter as “a horizontal acquisition machine.”