The management team bent on taking Insight Communications Co. Inc. private moved one step closer to that goal Friday, receiving approval from the MSO’s board of directors after upping its price to purchase the remaining publicly held shares of the cable company to $710 million in cash.
According to a press release, Insight Acquisition Corp. -- the entity consisting of chairman Sidney Knafel, CEO Michael Willner and private-equity firm The Carlyle Group L.L.C. -- will purchase the 86% of Insight’s outstanding stock it didn’t already own for $11.75 per share in cash. Knafel and Willner collectively own about 14% of Insight’s outstanding stock and 62% of its voting rights.
Willner, Knafel and Carlyle proposed taking the ninth-largest MSO in the country -- with 1.26 million subscribers -- private March 7 for $10.70 per share, or $650 million. On March 8, it appointed an independent committee of its board of directors -- consisting of LLJ Capital senior managing director David Lee and Oxygen Media Inc. chairman and CEO Geraldine Laybourne -- to evaluate the proposal. The independent committee hired Citigroup Global Markets Inc. and Evercore Partners as financial advisors March 16.
The $11.75-per-share price represents a 21.4% premium to Insight’s closing price March 4 (the last trading day before the initial announcement) of $9.68. Insight’s stock has risen substantially since then, closing at $11.20 July 28. The stock was priced at $11.56 each in early trading July 29, up 36 cents per share.
The deal still needs to be approved by Insight’s shareholders, and it must pass muster from federal regulators.
“Our current management team looks forward to continuing to lead this great business in the future, while building on our tradition of providing outstanding service and innovative solutions to our customers,” Willner said in a prepared statement.
Insight also released its second-quarter financial results Friday, growing revenue 11% to $279.3 million but losing 14,200 basic subscribers. Insight added about 1,800 digital-cable customers, 23,500 high-speed-data subscribers and 4,900 telephone subscribers.
Operating income before depreciation and amortization (OIBDA) was up 15% in the period to $122.4 million.
While the basic-subscriber losses were lower than the 15,500 decline in the same quarter last year, Insight said it is still feeling the heat from local-into-local launches by direct-broadcast satellite competitors and bundled offers from digital-subscriber-line service providers.
Insight said in a prepared statement that in order to reverse that trend, it is increasing its customer-retention efforts by focusing on bundling, enhancing and differentiating its video offerings and providing video-on-demand, HDTV and digital-video recorders.
The MSO added that it is concentrating on improving customer service through quicker response times, increased education of product offerings and increased spending on sales and marketing efforts.