Time Warner Puts 100K Subs on Block

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Looking to unload some of its non-strategic assets, Time Warner Cable has put several rural systems with a combined total of about 100,000 subscribers on the block.

The systems are primarily located in the Southeast, around the Florida panhandle, and in Kansas and Missouri.

Waller Capital Corp. is assisting Time Warner Cable in the sale.

While the systems themselves are in relatively small markets, more than 80 percent are in two clusters in Independence, Emporia and Chanute, Kan., with about 40,000 subscribers and in DeFuniak Springs, Century and Plantation, Fla., with another 40,000 customers.

Time Warner Cable spokesman Michael Luftman said most of the systems are upgraded, and added that they do not fit into Time Warner's focus on large urban and suburban clusters.

For example, Emporia has about 9,000 subscribers and DeFuniak Springs serves roughly 11,000 homes. The smaller systems include Jasper, N.Y., with 57 customers and Troupsburg, N.Y., with 47 customers.

"It goes according to your definition of clustering," Luftman said. "From our perspective on clustering — which is systems serving 100,000 and above — no, we wouldn't call them clustering by Time Warner Cable standards, and yet there are these two large groups of systems within geographic areas."

Time Warner has about 12.7 million subscribers nationwide, with about 90 percent of those customers located within clusters of 100,000 subscribers or more.

Although neither Waller Capital nor Time Warner would speculate on the price they expect the systems to fetch, other observers expect the operations to attract between $2,000 and $3,000 per subscriber. Given that price range, Time Warner could get between $200 million and $300 million from the sales.

Likely bidders include Mediacom Communications Corp., which has some systems in Kansas and Missouri, and Bresnan Communications Inc., which also is bidding on AT&T Broadband-owned systems in Montana, Wyoming and Colorado. The sale of the AT&T systems, with a total of 340,000 subscribers, has been on hold as the company weighs bids for its entire Broadband unit.

Mediacom recently completed a series of deals with AT&T Broadband, purchasing systems in Iowa, Kansas and Missouri with 800,000 subscribers for $2 billion.

"We might be interested," Bresnan said concerning the Time Warner Cable systems. "We'd be interested in getting the book."

It is expected that Waller will release the book on the systems — which will include more detailed information on their operations — later this month.

Waller Capital president John Waller declined to comment.

The rural systems appear to fit in with Bresnan's past strategy. Many of the 690,000 subscribers that Bresnan Communications owned were in rural markets when he sold them to Charter Communications Inc. in 1999 for $3 billion in stock and debt.

Bresnan also has been known to be interested in systems that are located near universities. The Emporia operations are near Emporia State University, a liberal arts college with about 5,600 students.

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