Mallard Hovers Over Galaxy, Cox Systems

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Little Mallard Cablevision LLC is in the process of striking two deals that could add nearly 150,000 customers to its current 90,000-subscriber base.

Mallard-in which New York-based BG Media Investors Inc. holds an equity stake-has signed a letter of intent to purchase former Peak Cablevision systems with between 20,000 and 30,000 subscribers from Cox Communications Inc., according to BG Media partner Earl Macomber. The systems are in Nevada and Utah.

Cox spokeswoman Amy Cohn confirmed Cox was considering selling the Nevada and Utah properties, but said that talks haven't progressed to the point where the company will comment further.

Earlier, El Campo, Texas-based Mallard signed a letter of intent to purchase Sikeston, Mo.-based Galaxy Cablevision, swooping in after an earlier deal to sell the systems to Adelphia Communications Corp. fell through. The Mallard moves were reported in the June 5 issue of Cablevision magazine.

The Galaxy deal would add about 123,000 subscribers in 13 states in the Midwest and Southeast portions of the country, according to Macomber. Mallard currently has about 90,000 subscribers in the Southeast and Midwest.

Adelphia had planned to purchase the Galaxy systems in January, but negotiations broke down over differences in the structure of the deal, according to sources.

"They never really agreed upon the structure, the whole concept," one source familiar with the deal said. "It just kept getting delayed, and then the whole market weakened a little bit." Galaxy officials did not return calls.

Adelphia was expected to pay less than $2,000 per subscriber for the Galaxy systems, primarily because the systems were in need of substantial upgrades. Most of the company's systems are between 330-megahertz and 450-MHz capacity, and its headends serve an average of between 700 and 800 customers each.

The company is in the middle of a $20 million rebuild, which it hopes to complete in about three years.

Galaxy is largely owned by three venture-capital companies: Spectrum Equity Investors L.P., T.A. Associates and Fleet Equity. Those entities have held positions in the company since 1994, and they were widely believed to be looking to cash out.

Macomber said there was no closing date set for the Galaxy deal, but he hoped it could be completed by the end of the year.

Mallard is looking at additional acquisitions, he added, mainly in rural markets. "[Acquisitions] have to fit," he said. "Bigger is better, but only if it's smarter."

In entering the rural-cable-consolidation business, Mallard joins Classic Cable Inc., Mediacom Communications Corp. and Cox's TCA Cable division. Cox bought TCA-which had 883,000 subscribers in secondary markets in the Southeast-in August for about $4 billion in cash and stock.

Macomber said Mallard's acquisition opportunities might be enhanced by declining share prices for Mediacom and Classic.

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