Comcast Subs on Block
400,000 In Small, Non-Core Markets
by Mike Farrell -- Multichannel News, 5/26/2008
Comcast is looking to shed about 400,000 subscribers in non-strategic markets across the country and has hired New York-based cable investment banker Waller Capital to broker the deal, according to people familiar with the companies.
According to cable executives familiar with the situation, Comcast is planning to jettison about 46 systems in several different markets, including smaller systems in Maine, New Mexico, Virginia, Kentucky and other states.
News of Comcast's plans first came out in the Freeport, Maine, Times Record after local officials said they were contacted by Comcast executives concerning their plans to sell their systems in the state. According to the Times Record, Comcast provides cable service to about 11 towns in Maine.
“We can't comment on potential transactions,” said Comcast spokesman John Demming. Waller Capital officials declined to comment.
In a research note, Pali Research analyst Richard Greenfield said that he believed the sales would be a good move for Comcast.
“In fact, we believe Comcast should look to get even smaller, increasing its focus on its top clusters, given the inherent advantages of mega-clusters in top demographic areas,” Greenfield wrote.
One likely buyer for the Maine systems could be Time Warner Cable, which dominates the state. But as far as the other systems, they could either go to strategic buyers looking to bolster existing clusters, or to a new entrant looking to acquire scale.
Pricing for the systems could not be determined. Recent prices for relatively small systems have ranged from $2,500 per subscriber to as high as $4,000 per subscriber. In November, Broadstripe purchased 50,000-subscriber James Cable for an estimated $125 million, or $2,500 per customer. And in December of last year SureWest Communications purchased Lenexa, Kan.-based Everest Broadband for $173 million, or about $4,000 per subscriber.
