Time Warner Cable Sells 80,000 Subscribers

Buyer Formed Specifically For Deal

By Mike Farrell -- Multichannel News, 7/10/2008 4:53:00 PM

Time Warner Cable said late Thursday that it has reached an agreement to sell systems in several non-strategic markets with about 80,000 subscribers to Windjammer Communications for an undisclosed sum.

The systems have been on the auction block since the spring. New York-based cable investment banker Waller Capital Corp. was said to be advising Time Warner on the sale. Waller officials declined comment.

Windjammer was created specifically for the deal and consists of Boston private equity concern MAST Capital Management and Jupiter, Fla.-based small cable operator Communications Construction Services. The price of the deal was not disclosed but TWC said in a statement that its second-quarter results will reflect a $45 million loss on the sale of the systems.

According to the press release, the systems are located on 125 headends in 25 different states. With 80,000 subscribers, that means that each headend has roughly 640 subscribers, indicating that those systems are extremely rural in nature.

Executives in the cable community familiar with the deal said that while the systems do need upgrades there is upside potential to offer high-speed data and telephony because with 120,000 revenue-generating units, they average about 1.5 services per customer.

“That means that they’re not offering much high-speed data and no voice service,” the executive said.

Time Warner Cable said that it expects to close the deal during the fourth quarter, subject to customary regulatory approvals.