Less than 18 months after it received a $125 million capital infusion from private equity firm Crestview Partners, overbuilder WideOpenWest is set to test the public markets, filing the preliminary documents for an initial public offering that could raise as much as $750 million.
UBS Investment Bank and Credit Suisse are serving as joint book-running managers for the offering.
WideOpenWest, which has about 486,400 basic video customers in Alabama, Florida, Georgia, Illinois, Indiana, Maryland, Michigan, Ohio, South Carolina and Tennessee, hasn’t determined which exchange it will trade on or how much stock it will offer. In a prospectus filed with the Securities and Exchange Commission on March 23, WOW said that it could raise about $100 million from the offering, but some outlets have estimated that figure will grow to as much as $750 million.
Crestview purchased a 30% interest in Wide Open West in December 2015 from Avista Capital Partners for $125 million. In addition, Crestview partner and Marcus Cable founder Jeffrey Marcus was named chairman of the overbuilder. Avista still owns about 60% of the company.
Under Crestview WOW has made some acquisitions – it purchased Atlanta area cable operator NuLink for about $54.3 million in August. But overall, the overbuilder has been patient on the deal front. While other private equity-backed operators have been hunting down targets – TPG Capital purchased overbuilder RCN and Grande Communications in August for $2.25 billion -- WOW has sat on the sidelines, content to focus on customer service and product packaging.
Marcus, who built Marcus Cable from scratch in the 1980s before selling it to Microsoft co-founder Paul Allen in 1998, said in a July interview that one of WOW’s main directives would be to offer video, voice and data services in packages that consumers want. So-called skinny bundles have been the rage with other operators and over-the-top service providers and he believed WOW was positioned to differentiate itself even further through targeted offerings.
“I think the content providers are going to have to figure out where they want to play, where their bread is buttered and how they want to provide their programming,” Marcus said in July. “I think that HBO Now and CBS and others that provide OTT programming are doing it in a way where they are putting their toe in the water, and it’s good for the cable operators to provide for their customers.”
Back in July, Marcus said that while WOW would look at every opportunity that comes up, there was no burning need to increase scale.
“It’s all opportunistic,” Marcus said. “When I started Marcus Cable with 18,000 subscribers, I had no idea that it would get to 1.3 million. One thing led to another and we took advantage of opportunities as they presented themselves. I think that’s what is going to happen here.“
WOW has managed to grow revenue in 2016 to $1.2 billion after a few lean years. In 2014, the company laid off about 275 workers to compete more efficiently.
WOW hasn’t set a date yet for the IPO, but having a public currency could make it easier to buy other smaller companies or even be purchased itself. WOW has about the same number of video customers as another small public cable operator – Cable One – which has been considered a take-over target for years. Cable One, which went public in 2015, agreed in January to purchase NewWave Communications for $735 million in cash.