Jeffrey Marcus is the latest cable pioneer to re-enter the cable business, surfacing as part of a group of investors that has agreed to purchase Adelphia Communications Corp.’s Puerto Rico cable assets for about $520 million.
In a press release Monday, Adelphia said it sold the Puerto Rico systems -- which were not included in the $17.6 billion deal to sell its U.S. cable assets to Time Warner Inc. and Comcast Corp. -- to MidOcean Partners LLP, a London and New York private-equity partnership, and Crestview Partners, a private-equity firm that includes Marcus.
The Puerto Rico systems were jointly owned by Adelphia and ML Media Partners LP, and they have about 137,000 subscribers in San Juan and surrounding communities. The deal represents a healthy valuation for the systems -- about $3,800 per subscriber.
ML and Adelphia had been at odds regarding the partnership for years. In 2004, ML attempted to sell the properties to a private-equity group headed by former FrontierVision Partners and Western Integrated Networks LLC head James Vaughn. That deal, for about $625 million, never got off the ground.
Marcus, now managing director of Crestview, has been out of the cable business since selling his Marcus Cable to Microsoft Corp. cofounder Paul Allen in April 1998 for $2.8 billion in cash and assumed debt.
Allen combined the Marcus properties shortly after that deal was completed with another acquisition -- Charter Communications Inc. Marcus left the company a few months later, signing on as CEO of radio- and television-station owner Chancellor Media Corp. in May 1998. He resigned as CEO of Chancellor about one year later.
Marcus was unanimously confirmed by the U.S. Senate as U.S. ambassador to Belgium in August 2003, only to resign from the position two months, later citing personal reasons.
“We look forward to working with the team in Puerto Rico to optimize the potential of the cable-television system,” Marcus said in a prepared statement. “Cable is a core competency for Crestview, and we are delighted to be partnering with MidOcean in this venture.”
Closing of the deal is expected by the fourth quarter of this year.
Lazard Ltd. acted as financial advisors to Adelphia. Daniels & Associates acted as financial advisors to ML. DH Capital LLC acted as financial advisors for MidOcean and Crestview. Citigroup Inc. and J.P. Morgan Chase & Co. are providing the debt financing.
In an interview, Marcus said that aside from the odd cable dinner and a few Entrepreneurs Club meetings, he has kept away from the industry since selling his systems to Allen. But he added that his belief in the strength of the cable business prompted him to get back in.
“The cable industry today is certainly different than it was seven years ago when we sold Marcus Cable, but I still believe in the power of the platform,” Marcus said. “The industry always seems to be able to deliver another product line that people want and make itself continually attractive to the subscriber. Certainly, the past seven years have borne that out, and I think there is more to come.”
While Marcus said it feels “familiar in a good way” to be back in the industry, he would not comment on whether he would run the Puerto Rico systems once the deal is closed. However, he acknowledged that he is the only member of Crestview with cable-operations experience.
Marcus joined Crestview in September 2004. This is Crestview’s first cable deal.
Marcus also would not comment on whether Crestview would look to grow its cable presence, but he hinted that other deals could be coming.
“Obviously cable is our core competency for Crestview,” he added. “We like cable.”