Finance

New York City, PSC Staff Wary of Altice-Cablevision Deal

Low-Cost Broadband, Job Retention at Top of List 2/06/2016 1:00 PM Eastern

New York City officials and state regulators continued to voice their reticence concerning European telecom giant Altice’s proposed $17.7 billion acquisition of Cablevision Systems, claiming the deal will not be in the public interest unless conditions are applied.

 

Neither the state nor the city have made any official decisions on the deal, which aren’t expected to come until at least the spring. And the city has expressed reservations about the deal before. But in separate filings with the state Public Service Commission on Feb. 5, New York City Public Advocate Letitia James and state PSC staff found some common ground in their opposition to the deal, claiming that dramatic cuts proposed by Altice could egregiously affect Cablevision’s customer service, its ability to provide low-cost and reliable broadband to all consumers and could result in massive job cuts at the cable company.

 

In a statement, Altice said it is moving along in the regulatory approval process.

 

"Altice remains actively engaged in the regulatory process, which is well underway in all regions and proceeding as we anticipated," The company said in a statement. "We look forward to that process continuing in a fair and open manner."

 

Altice announced its agreement to purchase Cablevision in a deal valued at $17.7 billion in September.  The telecom company had said that it had planned to slash about $900 million in costs at Cablevision over the course of several years, by eliminating redundancies, improving the network and making the operation more efficient.

 

Both the PSC staff and James expressed doubt about how Altice would be able to pare that much from the cable company. In the PSC staff filing, Moody’s investors Service estimated that Altice could achieve about $450 million in cost savings in a two-to-three year period.

 

Public Advocate James saw the cost-cutting initiative and Altice’s past track record as a blueprint for poor service and customer losses. She cited the loss of about 1 million customers at Altice’s European wireless unit SFR after a series of dramatic cuts.

 

“Thus, customer losses are inevitable as Altice’s ‘extreme’ acquisition expenditures require ‘huge’ cuts to customer service, installation costs, maintenance, and marketing,” James wrote in the filing.

 

The city has made no bones about its objection to the Altice/Cablevision marriage in the past. And while its approval is needed to transfer Cablevision’s franchise, there is still some question as to what power the city, or the state for that matter, has to block the deal.

 

It should also be noted that city and state officials also talked tough about Charter Communications’ planned merger with Time Warner Cable, but managed to sign off on that deal after the parties agreed to several conditions.

 

Both the state and the city are asking for similar concessions in the Altice deal. The conditions state PSC staff recommended in its filing including offering $10 per month low-cost 30-Megabits-per-second broadband ($14.95 monthly after modem fees and charges are included) to low-income families in its service territory; upgrading its network to fiber within 36 months after the deal closes, improve broadband speeds to 300Mbps by the third year after close; agree to not eliminate any “customer-facing jobs” for 5 years after the close and provide standalone and Lifeline phone service.

 

The state has said it expects to make a decision on the transaction by April 29, well within Altice’s first half of 2016 target to complete the deal. The transaction also will require Federal Communications Commission approval.

 

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