After months of waiting, Bill Bresnan is finally back in the cable business, having purchased 320,000 subscribers in Montana, Wyoming and parts of Colorado from AT&T Broadband for $735 million in cash.
Bresnan has been involved in the Broadband auction process for nearly a year. In fact, his name first popped up as a potential bidder for the systems during last year's National Show.
Although he had to be patient and withstand some competition — Alaskan cable and telecommunications service provider General Communications Inc. was said to be one of the other bidders — Bresnan won out in the end.
At the price he paid, the acquisition works out to be about $2,300 per subscriber — well below the average system valuation of between $4,500 and $5,000 per subscriber, but within the expected range of $2,100 to $2,500.
The systems are in largely rural areas, including Bozeman and Billings, Mont.; Grand Junction, Colo.; and Cheyenne and Laramie, Wyo.
The largest properties are in Billings, with 32,000 subscribers; Bozeman and Grand Junction, each with 26,000 subscribers; Cheyenne, with 23,000 subscribers; and Missoula, with 17,000 subscribers.
"I'm very pleased to be back," Bresnan said. "Actually, I've claimed I have never been out of cable, I just didn't have any systems. A slight oversight."
Denver cable investment banker Daniels & Associates represented AT&T in the deal.
GOT START IN '58
One of the most respected executives in the cable industry, Bresnan built and designed his first system in Rochester, Minn., in 1958.
After selling that system to Jack Kent Cooke Inc. in 1965, Bresnan joined Cooke's executive team. Following a series of mergers, he served as president of TelePrompTer Corp.'s cable television division from 1974 to 1981 and as chairman of Group W Cable Inc. from 1981 to 1984.
Bresnan founded Bresnan Communications Co. L.P. in 1984. It owned 690,000 subscribers in Michigan, Minnesota, Wisconsin and Nebraska. He sold out to Charter Communications Inc. in 2000 for about $3.1 billion in cash, stock and assumed debt.
MSO executives were pleased to see Bresnan return.
"I'm rolling out the red carpet," Insight Communications Co. president Michael Willner said. "This industry needs good, high-quality senior leadership. Having him [Bresnan] back is terriffic."
After selling out to Charter, Bresnan kept his core management team together, looking ahead to the day he might return. Those executives include: executive vice president Daniel Bresnan; senior vice president of community development Patrick Bresnan; senior vice president and general counsel Robert Bresnan; executive vice president and CFO Jeffrey DeMond; senior vice president of telephone and data services Leonard Higgins; senior vice president and controller Andrew Kober; senior vice president of engineering Gareth McIntosh; and senior vice president of business development Terry St. Marie.
EYED EARLIER DEAL
Bresnan has been eyeing cable systems ever since he sold out to Charter, sources said. He was said to be one of the parties interested in AT&T's Iowa, Illinois, Georgia and Missouri systems, which were later sold to Mediacom Communications Corp. as part of a $2.1 billion package of 800,000 Midwest subscribers.
Although the Montana, Wyoming and Colorado systems need work, Bresnan said he is willing to spend the money necessary to get them up to speed. Bresnan and his partners are committed to spending about $300 million over the next three years for upgrades, he added.
Bresnan said he continues to look for additional financial partners.
Many of the systems he's buying are located near universities, a favorite of his in the past, he said. Although they're not tightly clustered, the markets he acquired through the AT&T deal should lend themselves well to headend consolidation, he added.
"When we sold to Charter, we had three-quarters of our subscribers on five headends," Bresnan said. "That's the kind of thing we hope to do up there. These are the kinds of communities that I like to do business in. I'm a small-town boy."
Bresnan is a native of Mankato, Minn., population 31,477.
He said he does not plan to stop with the AT&T deal. "We've got our hands full here, but the hope is to make additional acquisitions and build the company up," said Bresnan.
The Montana, Wyoming and Colorado systems first came on the block in December 2000 as part of a package that also included larger systems in Nevada, Iowa, Missouri and Alabama.
While AT&T sold its Nevada, Missouri and Alabama systems to Charter Communications Inc. and its Iowa systems to Mediacom, the sale of the Big Sky systems was put on hold.
Last May, AT&T put the systems back up for sale, only to delay the process in July, after Comcast Corp. made its unsolicited bid for all of AT&T Broadband. After Comcast and AT&T Broadband agreed to merge, AT&T restarted the process for a third time.
"Our long-term goal is to operate cable systems clustered in major metropolitan markets," AT&T Broadband CEO William Schleyer said in a prepared statement announcing the deal. "Bresnan will do a terrific job managing these systems, so this transaction will prove good for us, for Bresnan and, most important, for customers and employees of the systems."