Altice in talks to enter US cable market
Altice, the European cable and mobile group, is in advanced discussions to acquire Suddenlink Communications, the seventh-largest US cable operator with almost 1.5m subscribers, according to people familiar with the matter.
The value of the deal, which could be announced as soon as Wednesday morning, is likely to be in excess of the $6.6bn BC Partners and CPP Investment Board paid in 2012 to buy Suddenlink from another investor group, these people said.
Altice and Suddenlink both declined to comment.
In an industry where economies of scale between neighbouring networks offer big savings, cross-border cable deals are uncommon, sparking speculation that this may not be Altice’s last deal in the US.
Patrick Drahi, Altice’s billionaire founder, once worked for John Malone, and has ambitions that are increasingly putting him in competition with those of the US “cable king”.
People familiar with the matter said Altice recently lost out to Mr Malone’s Liberty Global European cable group in the bidding for Base, a Belgian mobile operator, and the two men could find themselves in competition again in US cable.
Through his investment in Charter Communications, Mr Malone has helped spur recent dealmaking in a US cable market where growth is increasingly driven by broadband internet access rather than video. The failure of Comcast’s $45bn bid for Time Warner Cable has intensified speculation about follow-on deals.
Rich Greenfield, an analyst at BTIG, said Suddenlink’s new owner could look at combining it with MediaCom, but he did not expect Altice to do a deal with a bigger cable company.
1.5m
Number of subscribers at Suddenlink Communications, the seventh-largest US cable operator
Altice, which has a market value of almost €29bn, has made aggressive efforts to consolidate the French communications market, where it controls Numericable-SFR. Expectations of an eventual deal with Bouygues have ebbed, but Dexter Goei, chief executive, told the Financial Times in February that the group is on the hunt for bigger acquisitions.
Suddenlink, led by chief executive Jerry Kent, has operations spanning Texas, West Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, Arizona and elsewhere.
“Altice is effectively buying a broadband monopoly because there’s no fibre in (Suddenlink’s) area,” Mr Greenfield said, describing the company as “a well-run operation that is focused on the cash flow out of the broadband business.”
“Rural cable has always had the benefit of not having the same level of competition. That’s why Suddenlink has been successful — they’ve really focused on being all about broadband,” he said.
Suddenlink made headlines recently when it dropped Viacom’s channels in a high-profile dispute with the owner of MTV, Comedy Central and Nickelodeon.
Mr Kent has spoken about “an evolutionary shift in how the [US] pay-TV model works” as media owners, telecoms companies, cable groups and tech companies all experiment with online video and allowing consumers to watch content without cable or satellite subscriptions.
He told the FT earlier this year: “With these shifts, it really has transformed from the old argument that content is king to the consumer is king.”
News of the talks, first reported by the Wall Street Journal, came as Mr Malone told an interviewer there “would be very substantial synergies” in a combination between Liberty Global and Vodafone, the London-listed mobile operator.
He cautioned, however, that such a deal could be hard to pull off. Vodafone was like “a big banana in a jar”, he told Bloomberg: “The question is: how do you get your hand out of the jar with the banana.”