Insight Tests Deal Waters

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About three years after pulling itself off the selling block when the deal market collapsed along with the economy, Insight Communications is gearing up to test the waters again, hiring investment bankers Bank of America Merrill Lynch and UBS to search for a potential buyer.

Reuters first reported Tuesday that Insight had hired the two investment bankers to run the auction process. Sources familiar with the company confirmed that it is exploring a possible sale.

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Insight spokeswoman Sandy Colony declined to comment, noting the company policy not to comment on rumor and speculation.
Insight, which went private in 2005, had tested the deal waters in 2007, reportedly attracting several bids but none at the price its primary owners - private equity boutique Carlyle Group - had in mind. In 2008, as the economy tanked and the debt markets seized up making it almost impossible to finance a deal, Carlyle took the property off the block. In 2010 Carlyle sold a large chunk of its equity in the MSO (it retained 42%) to Crestview Partners and MidOcean Partners, two private equity groups that include cable pioneer Jeff Marcus, for an undisclosed sum.
But recent deals at attractive multiples have lured Insight back to the auction block. Cablevision Systems closed on its $1.4 billion acquisition of Bresnan Communications in December at a cash flow multiple of about 8.3 times. Several smaller deals have been done a multiples ranging from 6 times to 7 times cash flow. Insight has a stellar reputation as one of the best run cable companies in the industry. It is the ninth largest MSO in the country with 761,400 customers in Kentucky, Indiana and Ohio.
According to Reuters, Insight could attract between $3.5 billion and $4 billion, which would value the cable company at between 10 and 11 times its 2010 cash flow of $344 million.
According to sources familiar with the company, the most likely buyer is Time Warner Cable, which has systems adjacent to Insight's in Ohio and Indiana, but other strategic buyers such as Charter Communications, Cablevision Systems, Suddenlink Communications and even Mediacom Communications are also possibilities.
"I wouldn't rule anything out," said Miller Tabak media analyst David Joyce, adding that private equity players, including Crestview and MidOcean, could participate.

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