Dan Ryan, the former Charter Communications Inc. executive who struck out on his own last summer to buy small-market cable properties, has made his first acquisition, with the purchase of about 16,000 subscribers from Cox Communications Inc.
Terms weren't disclosed. But according to sources, the purchase price was under $1,000 per subscriber. Given that benchmark, the deal was worth about $16 million.
The purchase price was very low, even for rural systems, which have fetched prices in the $2,000 per subscriber range. Sources familiar with the matter said the systems were in considerable need of upgrades.
The systems are located in Nevada, southern and central Utah, and northern Arizona, and were formerly owned by Peak Cablevision Inc. Cox bought Peak in 2000 as part of its acquisition of TCA Cable Inc.
Cox spokeswoman Amy Cohn said the systems were put on the block mainly because they were not contiguous with other existing Cox systems.
Cox had planned to sell the systems in 2000 — it entered into a letter of intent with Mallard Cable to sell the Utah properties, as well as systems with about 14,000 customers in Nevada — but that deal fell through.
Ryan, was vice president of operations for Charter's Rocky Mountain Group until he formed Precis Communications, a vehicle to buy rural MSOs. Ryan already has lined up a backer in Boston-based Housatonic Partners, which has invested more than $10 million in the venture.
Ryan did not return repeated calls for comment. But in an interview last August, he said he would like to initially grow the company to between 10,000 and 20,000 subscribers. The goal is to eventually reach about 100,000 subscribers.
Ryan had been in charge of Charter's Rocky Mountain Group — which has about 160,000 subscribers in Colorado, New Mexico, Kansas, Oklahoma, Nebraska, Utah and Nevada — for about two years.
Prior to Charter, Ryan spent eight years with Rifkin Associates Inc., a Denver-based consulting firm and MSO that sold its cable operations to Charter in 1999.
Housatonic Partners is a private-equity firm with more than $250 million under management and has a prior history in cable. Its biggest system investment was in Fundy Communications Inc., the 192,000-subscriber New Brunswick, Canada, cable operator that sold out to Shaw Communications in 1999 for $312 million.
Housatonic also has invested in Rapid Communications Partners LP — which had 22,000 subscribers in seven states — and Cambridge Communications, which operated rural systems in New Mexico, Oregon and Washington and was sold to USA Media in 1999.
Current Housatonic cable holdings include investments in Central Valley Cable, which has about 4,800 subscribers in three rural California systems.