So how does this story (from Tuesday's New York Times) fit in everyone's predictions of the future?
Cablevision May Join Adelphia Bid
By ANDREW ROSS SORKIN The New York Times March 29, 2005
Cablevision Systems is in advanced talks to join two big private equity firms that are bidding for Adelphia Communications, adding an 11th-hour twist to an auction that had seemed certain to be won by another team comprising the nation's two biggest cable operators, executives involved in the process said.
If Cablevision jumps into the battle for Adelphia, it would face its longtime rival, Time Warner, which is allied with Comcast in the auction. The Time Warner-Comcast alliance has long been favored to win, and in recent weeks has appeared close to reaching a final agreement for control of the company by paying more than $18 billion in stock, according to the executives.
Cablevision has been holding talks with Kohlberg Kravis Roberts and Providence Equity Partners about forming a group that, if successful, would merge the two cable companies to create a national operator, with 8.4 million subscribers. The equity firms would end up with a significant stake in the combined, publicly traded company, the executives said.
Kohlberg Kravis and Providence have already submitted an all-cash bid worth about $15 billion for Adelphia and would submit a "substantially higher" offer if Cablevision decided to join them, the executives said.
Cablevision's interest in a merger comes at a time of tremendous turmoil within the company, leading many on Wall Street to speculate that it would consider selling its cable assets. Its controlling shareholder and founder, Charles F. Dolan, recently lost a showdown with the company's board and his son over the company's satellite television operation, prompting him to oust three directors who had voted against him.
Cablevision is also fighting a fierce battle in New York City to block the construction of a stadium complex for the New York Jets football team that would create competition for Madison Square Garden and Radio City Music Hall, both Cablevision properties.
In an effort to prevent the stadium's construction, Cablevision has submitted a $760 million bid for the proposed stadium's site. A Cablevision-Adelphia combination would substantially change the equation between Cablevision and Time Warner, which has 10.9 million subscribers and has long been considered the natural buyer for Cablevision's cable assets because of their proximity to Time Warner's stronghold in Manhattan.
But a deal for Adelphia would mean that Cablevision would be recommitted to cable and would make it more valuable should it ever decide to negotiate a sale. Cablevision, based in Bethpage, N.Y., has lucrative systems in New York's suburbs, while Adelphia has systems in Los Angeles, upstate New York and elsewhere in the country.
With the addition of Cablevision, the investor group bidding for Adelphia could tilt the auction in its favor. Its inclusion in the group could help the consortium justify making a higher bid because of the cost savings on programming and hardware that a combined Cablevision-Adelphia could negotiate. The group would also be able to rely on Cablevision's well-regarded management to run the combined company, the executives said.
But the executives cautioned that Cablevision was still in the process of making a final decision about whether to join the group and could decide against it. The exact proposed terms of the deal could not be learned.
Representatives for Cablevision, Kohlberg Kravis Roberts and Providence all declined to comment.
If Cablevision joins Kohlberg Kravis and Providence, it would be the latest example of a growing trend of corporations and private equity firms teaming up. Last year, Sony joined with Providence, the Texas Pacific Group and DLJ Merchant Banking Partners to win an auction for Metro-Goldwyn-Mayer, adding Comcast as a last-minute partner to clinch the deal. This month, Kohlberg Kravis and Bain Capital teamed up with Vornado Realty Trust to buy Toys "R" Us.
Private equity firms themselves are increasingly forming investor groups to enable them to afford to buy bigger companies. Just yesterday, SunGard Data Systems was sold to seven private equity firms, including Kohlberg Kravis and Providence, for $11.3 billion, the largest leveraged buyout since Kohlberg Kravis's acquisition of RJR Nabisco in 1989 for $25 billion.
The Adelphia auction, which is being run by UBS and Allen & Company, is particularly complicated because Adelphia, which is in bankruptcy protection, is simultaneously considering not just whom to sell itself to but also whether to sell at all. Its other option is to take itself out of bankruptcy.
Cablevision May Join Adelphia Bid
By ANDREW ROSS SORKIN The New York Times March 29, 2005
Cablevision Systems is in advanced talks to join two big private equity firms that are bidding for Adelphia Communications, adding an 11th-hour twist to an auction that had seemed certain to be won by another team comprising the nation's two biggest cable operators, executives involved in the process said.
If Cablevision jumps into the battle for Adelphia, it would face its longtime rival, Time Warner, which is allied with Comcast in the auction. The Time Warner-Comcast alliance has long been favored to win, and in recent weeks has appeared close to reaching a final agreement for control of the company by paying more than $18 billion in stock, according to the executives.
Cablevision has been holding talks with Kohlberg Kravis Roberts and Providence Equity Partners about forming a group that, if successful, would merge the two cable companies to create a national operator, with 8.4 million subscribers. The equity firms would end up with a significant stake in the combined, publicly traded company, the executives said.
Kohlberg Kravis and Providence have already submitted an all-cash bid worth about $15 billion for Adelphia and would submit a "substantially higher" offer if Cablevision decided to join them, the executives said.
Cablevision's interest in a merger comes at a time of tremendous turmoil within the company, leading many on Wall Street to speculate that it would consider selling its cable assets. Its controlling shareholder and founder, Charles F. Dolan, recently lost a showdown with the company's board and his son over the company's satellite television operation, prompting him to oust three directors who had voted against him.
Cablevision is also fighting a fierce battle in New York City to block the construction of a stadium complex for the New York Jets football team that would create competition for Madison Square Garden and Radio City Music Hall, both Cablevision properties.
In an effort to prevent the stadium's construction, Cablevision has submitted a $760 million bid for the proposed stadium's site. A Cablevision-Adelphia combination would substantially change the equation between Cablevision and Time Warner, which has 10.9 million subscribers and has long been considered the natural buyer for Cablevision's cable assets because of their proximity to Time Warner's stronghold in Manhattan.
But a deal for Adelphia would mean that Cablevision would be recommitted to cable and would make it more valuable should it ever decide to negotiate a sale. Cablevision, based in Bethpage, N.Y., has lucrative systems in New York's suburbs, while Adelphia has systems in Los Angeles, upstate New York and elsewhere in the country.
With the addition of Cablevision, the investor group bidding for Adelphia could tilt the auction in its favor. Its inclusion in the group could help the consortium justify making a higher bid because of the cost savings on programming and hardware that a combined Cablevision-Adelphia could negotiate. The group would also be able to rely on Cablevision's well-regarded management to run the combined company, the executives said.
But the executives cautioned that Cablevision was still in the process of making a final decision about whether to join the group and could decide against it. The exact proposed terms of the deal could not be learned.
Representatives for Cablevision, Kohlberg Kravis Roberts and Providence all declined to comment.
If Cablevision joins Kohlberg Kravis and Providence, it would be the latest example of a growing trend of corporations and private equity firms teaming up. Last year, Sony joined with Providence, the Texas Pacific Group and DLJ Merchant Banking Partners to win an auction for Metro-Goldwyn-Mayer, adding Comcast as a last-minute partner to clinch the deal. This month, Kohlberg Kravis and Bain Capital teamed up with Vornado Realty Trust to buy Toys "R" Us.
Private equity firms themselves are increasingly forming investor groups to enable them to afford to buy bigger companies. Just yesterday, SunGard Data Systems was sold to seven private equity firms, including Kohlberg Kravis and Providence, for $11.3 billion, the largest leveraged buyout since Kohlberg Kravis's acquisition of RJR Nabisco in 1989 for $25 billion.
The Adelphia auction, which is being run by UBS and Allen & Company, is particularly complicated because Adelphia, which is in bankruptcy protection, is simultaneously considering not just whom to sell itself to but also whether to sell at all. Its other option is to take itself out of bankruptcy.
