No Clear Winner for Insight

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The auction for Insight Communications
is winding down with bids in the
low $3 billion range and questions over
whether a deal will get done,
according to people familiar
with the matter.

Insight went on the block
in March and attracted a
range of strategic and financial
players. But the asking
price, estimated at between
$3.5 billion and $4 billion,
forced some early participants
to the sidelines. The field was pared down to
three companies in the final round in June
— overbuilder WideOpenWest, Mediacom
Communications and Cablevision Systems
— according to sources familiar with the

As final bids trickled in, Cablevision apparently
sat out — although it could re-enter
the fray at any moment, sources said
— leaving WOW and Mediacom to fight it
out with a smattering of buyout firms reportedly
still in the game. Mediacom is
facing some hurdles in raising cash for its
bid, and WOW — which has the money —
is hampered by potential regulatory issues.

WOW already competes with Insight in
Columbus, Ohio, and Evansville, Ind. Acquiring
Insight would effectively reduce the
number of wireline competitors in the market,
significantly reducing the chances regulators
would approve the deal.

The concern over a WOW deal is that if its
bid is accepted, but later rejected by the government,
“how do you allocate risk,” said one
member of the cable financial community
who asked not to be named. “If you sign a deal
and it doesn’t get approved, is there a break-up
fee? Does Insight get anything for its trouble?
What happens in the event it doesn’t work?”

That uncertainty could present an opportunity
for other potential bidders to swoop
in, like Time Warner Cable, which owns systems
surrounding Insight. TWC has stayed
out of the auction mainly because
of the price, but could step
in at the last minute with a lower

Crestview Partners and Mid-
Ocean Partners — which already
own a 42% interest in Insight —
could also buy out the Carlyle
Group’s 42% stake in the cable
company, some sources said.
While Carlyle, an investor in Insight since
2006, appears to be the more motivated seller, it
is unclear whether Crestview (which includes
cable pioneer Jeff rey Marcus) and Mid-Ocean
would want to own all of Insight.

Insight has about 693,000 basic video customers
in parts of Indiana, Kentucky and
Ohio. Bank of America Merrill Lynch and
UBS AG are running the auction for Insight.