Altice Throws Down Consolidation Gauntlet

CEO Says Everything Smaller Than Comcast is in Play
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Altice CEO Dexter Goei didn’t waste any time clearing the air about his greater intentions across the Atlantic, telling analysts and reporters Wednesday that he is poised to use the European telecom company’s latest acquisition – Suddenlink Communications – as a vehicle to consolidate the U.S. cable market.

On a conference call to discuss the Suddenlink deal, Goei said that every property “below Comcast is effectively in consolidation mode. We clearly expect to be right in the middle of that consolidation.”

That comment helped goose the stocks of several cable operators skyward – Cablevision Systems soared 11% and Time Warner Cable, said to be in Altice’s sights already, rose 3%. Charter Communications, which up until this morning was expected to be the prime consolidator in the U.S. cable market, saw its stock dip about 1%.

Cablevision Systems CEO Jim Dolan effectively put his company in play at INTX: The Internet & Television Expo earlier this month when he said that efforts should concentrate on consolidating markets and not companies. He offered the New York metro market — in which Cablevision operates — as a prime candidate.

Analysts were split on whether Altice would set its sights on Cablevision – it already has had some preliminary talks with Time Warner Cable, according to reports – and questions around its valuation and competitive position (it has the highest exposure to Verizon’s FiOS TV in the industry) could cloud a deal.

Pivotal Research Group CEO and media & communications senior analyst Jeff Wlodarczak wrote in a note to clients that Altice’s entrance into the consolidation fray could make Cablevision an attractive buy.

The presence of an aggressive Altice plus what appears to be Cablevision’s increasing willingness to sell plus our previous belief that Cablevision HAS to sell based on the direction of its core operations means the likelihood of a successful sale of the company has risen materially,” Wlodarczak wrote, adding that an Altice buy is not a slam dunk. He said “we believe Altice has to do more deals and the sizeable costs cuts available at Cablevision will likely prove to ultimately be attractive for Altice.”

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