Cable Operators

Charter Sells Systems for $896 Million

3/03/2006 7:00 PM Eastern

Charter Communications Inc. last week agreed to two separate deals — one previously reported in Multichannel News — to sell nonstrategic systems in West Virginia and Virginia and in Kentucky and Illinois for a total of $896 million.

Charter wouldn’t break out the pricing, but sources in the cable investment-banking community said Cebridge Connections — headed by former Charter CEO and Cequel III president Jerry Kent — will pay $750 million to $800 million for the properties in West Virginia and Virginia with about 240,000 customers. NewWave Communications, headed by cable veterans Jim and Tom Gleason, was expected to pay $100 million to $150 million for the Kentucky and Illinois properties, which have about 76,000 customers.

The deals are expected to close by the third quarter of this year. Daniels & Associates and J.P. Morgan Securities Inc. acted as advisers to Charter on both deals. New York-based Waller Capital Corp. served as adviser to NewWave.

As a whole, the deals value the systems at about $2,800 per subscriber. The more attractive West Virginia and Virginia systems brought in a higher valuation — about $3,100 per subscriber, according to UBS Warburg cable analyst Aryeh Bourkoff. The Kentucky and Illinois systems garnered about $2,000 per customer.

Kent said in a statement that it was good to do business again with his old company, and that one of his current key employees — Cebridge regional vice president of operations for the Atlantic region Dave Bach — ran those West Virginia and Virginia systems while at Charter. “So we know these properties are well-managed, not to mention a great matchup with our existing operations in West Virginia,” Kent’s statement said.

Cebridge currently has about 400,000 subscribers in 20 states. With this deal, and a deal reached late last year to buy 940,000 subscribers from Cox Communications Inc. (scheduled to close in late April or early May), Cebridge will vault into the No. 8 spot among the top 10 cable systems operators in the country with 1.5 million subscribers.

NewWave, of Sikeston, Mo., currently has about 20,000 subscribers, acquired in 2003.

September