Comcast Buys Patriot Media

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In its second deal in as many days, Comcast agreed to purchase Patriot Media & Communications for $483 million in cash, or about $6,000 per subscriber -- a valuation that makes the deal one of the largest in cable history.

Patriot, led by cable veteran Steve Simmons, has been on the block since August. The company has about 81,000 subscribers in 31 communities in central New Jersey, including Princeton, Chatham and Mendham.

The deal comes just one day after Comcast agreed to unwind its Insight Midwest partnership Monday with Insight Communications, gaining 684,000 subscribers in Illinois and Indiana.

The deal, which is expected to close in the third quarter, falls in the range of 10 to 11 times estimated 2006 cash flow. Patriot, according to cable executives who were involved in the auction process, expects to generate more than $570 in cash flow per subscriber in 2006, growing to more than $615 in 2007, one of the highest marks in the industry.

The deal makes sense in that Comcast has several properties in central New Jersey that are adjacent to the Patriot systems.

Patriot has been regarded as one of the best-run cable systems in the industry -- in three years, Simmons grew high-speed-data penetration from 15% of homes passed to 41% and digital penetration from 7% of homes passed to 41%. The company began rolling out a phone product last year.

But at $6,000 per subscriber, the deal is one of the pricier ones in cable history -- it trails only Adelphia Communications’ purchase of the Carlsbad, Calif., system owned by Daniels & Associates in 2000 for $6,879 per subscriber and Adelphia’s purchase of systems in Virginia, North Carolina and Maryland that same year for $6,200 per subscriber.

“Patriot Media systems are fully upgraded, have superior demographics, strong penetration of advanced products and, best of all, they geographically complement our systems in New Jersey,” Comcast chief operating officer Steve Burke said in a prepared statement. “We are delighted at the prospect of adding these new customers to Comcast in the near future and look forward to providing them with our advanced products and services.”

Simmons sold his 350,000-subscriber Simmons Communications in the mid-1990s before acquiring Patriot in 2003. His partners in the Patriot deal include Spectrum Equity Investors and Spire Capital.

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