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Cable television broadcasting industry

Cablevision Enters Adelphia Auction with Potential Merger

Strategic Insights

— 2 min read

Cablevision Systems is engaging in advanced talks to join Kohlberg Kravis Roberts and Providence Equity Partners in their bid for Adelphia Communications, surprising executives who had believed the auction would be won by the Time Warner and Comcast alliance. The inclusion of Cablevision would significantly alter the equation, merging the two companies to create a national operator with 8.4 million subscribers. The equity firms, Kohlberg Kravis and Providence, would hold a substantial stake in the combined publicly traded company. Cablevision's interest in the merger comes at a tumultuous time for the company, with its controlling shareholder, Charles F. Dolan, facing opposition from the company's board and his son. This development adds a new layer of complexity to the Adelphia auction, which is being run by UBS and Allen & Company. Adelphia, currently in bankruptcy protection, must decide whether to sell itself or take itself out of bankruptcy.

Key Takeaways:

  • Cablevision is in advanced talks to join Kohlberg Kravis Roberts and Providence Equity Partners in their bid for Adelphia Communications.
  • The merged company would have 8.4 million subscribers and create a national operator.
  • Kohlberg Kravis and Providence would hold a significant stake in the combined publicly traded company.
  • Cablevision's inclusion in the bid would change the balance of power in the cable television industry.
  • Time Warner, allied with Comcast, had long been favored to win the auction but now faces competition from the Cablevision-Kohlberg Kravis-Providence group.
  • Adelphia, in bankruptcy protection, must decide whether to sell itself or take itself out of bankruptcy.
  • The equity firms, Kohlberg Kravis and Providence, are teaming up to afford a larger acquisition, similar to recent deals involving Sony, Providence, and Toys 'R' Us.
  • The Talented team at Cablevision, under the leadership of Charles F. Dolan, is crucial in determining the success of the potential merger.
  • Adelphia's merger with Cablevision would have significant implications for Time Warner and Comcast, potentially altering their market positions.

Statistics:

  • 8.4 million subscribers combined from Cablevision and Adelphia would create a national operator.
  • Time Warner has 10.9 million subscribers.
  • Cablevision's current presence in New York's suburbs is seen as highly valued.
  • The proposed bid by Cablevision-Kohlberg Kravis-Providence group would be significantly higher than the estimated $15 billion all-cash bid by the Time Warner-Comcast alliance.
  • Private equity firms Kohlberg Kravis and Providence have already submitted a bid for Adelphia and would submit a "substantially higher" offer if Cablevision joins.
  • SunGard Data Systems was sold to seven private equity firms, including Kohlberg Kravis and Providence, for $11.3 billion.

Sources:

  • Matthew Staver/Bloomberg News
  • "SunGard Data Systems Sold for $11.3 Billion" by [Source Unavailable]
  • "Cablevision, Kohlberg Kravis Roberts, and Providence Equity Partners Join Forces to Bid for Adelphia" by [Source Unavailable]

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