Reports that Cablevision was among the bidders for Bresnan Communications sent Cablevision’s stock price skidding on Wednesday, although it recovered somewhat by the end of the week. Investors clearly turned thumbs down on the potential acquisition.
“We don’t like this either,” wrote Wells Fargo Securities analyst Marci Ryvicker in a note to clients. “While we get that Bresnan is in attractive local markets (i.e. no FiOS and U-Verse) – we just don’t understand how these particular assets in these particular markets fit well with CVC [Cablevision]. To us, CVC’s industry-leading success is precisely due to its unique footprint – which happens to be one dominant cluster in one of the wealthiest areas of the United States. And we question how just 320,000 incremental subs provide leverage in programming disputes? In our view it would be one thing if Bresnan had 3.2 million subs….but it doesn’t,” she said.
Along with Cablevision, Ascent Media (a John Malone company), Charter, Suddenlink and three private equity firms are said to have submitted bids for Bresnan, the nation’s 17th largest MSO. Founder William Bresnan continued as Chairman of the company until his death last November at age 75. Bresnan Communications is primarily owned by Providence Equity Partners, with Comcast holding a 30% stake. They and partner Quadrangle Group LLC are expecting to split over $1.3 billion from the sale.
