Cox System Auction Nears Wrapup

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The four-month long auction for Cox Communications Inc.’s 900,000 secondary-market subscribers could come to a close in the next few weeks.

Cox put the systems — mainly the former TCA Cable properties it purchased in 1999 — up for sale in March, and has received interest from several interested parties during the auction, said a company spokesman.

According to sources, bidders include Cebridge Connections, Mediacom Communications Corp., Patriot Media & Communications (backed by private equity group Spectrum Equity) and Bresnan Communications (backed by Providence Equity Partners).

Cox spokesman David Grabert said that a winning bidder or bidders could be named by the end of September or early October, in line with the company’s intention to land a deal in the fall. Closing on the systems would be late in the first quarter of 2006.

Books on the systems went out in June. The systems are located in Texas (Lubbock, Midland, Amarillo, San Angelo and Abilene); North Carolina (Greenville, Rocky Mount, New Bern and Kinston); Humboldt County, Calif.; and smaller systems in Louisiana, Arkansas, Oklahoma, Mississippi and Missouri.

Grabert said that the systems included in the sale located in Louisiana (39 communities including Bossier City, Bastrop, Grambling and Natchitoches) and in Mississippi (Greenville and Metcalfe) were not affected by Hurricane Katrina.

Patriot, which owns systems in Central New Jersey and Bresnan, which owns systems in Montana, Utah, Wyoming and Colorado, would acquire systems outside of their existing service areas if their bids succeeded.

A better geographic fit would be with Cebridge and Mediacom, which already have properties near the Cox systems.

Cebridge, for instance, would likely be most interested in Cox’s properties in Texas — near its own stronghold in the state — Illinois, Indiana, Arkansas and Missouri. Mediacom could concentrate on Cox systems in North Carolina; Humboldt County, Calif.; and Missouri, near its own systems in those areas.

Cox put the systems on the block mainly to help reduce some of the debt its parent Cox Enterprises Inc., incurred last year when it bought the remaining 38% of Cox Communications’ publicly traded stock it didn’t already own for about $8.5 billion.

Cox bought the TCA systems in 1999 at the height of the industry consolidation frenzy for about $4,000 per subscriber. The systems put up for sale could attract prices in the $2,000 to $3,000 per subscriber range, putting their total price in the $1.8 billion and $2.7 billion area, well below Cox’s outlay.

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