European telecom giant Altice is buying the largest cable provider in New York City's metropolitan area, agreeing to pay $17.7 billion to acquire Cablevision, the company that was founded in 1973 by the Dolan family.
The total value of the transaction reflects $10 billion in equity (valuing Cablevision at $34.90 a share) and another $7.7 billion in net debt.
The sale comes nearly eight years after Cablevision shareholders rejected a $10.6 billion offer from the Dolan family to purchase the company at more than $36 a share — but at the time, Cablevision's portfolio also included the Madison Square Garden Company (owner of the New York Knicks and Rangers), as well as AMC Networks. Since then, those sports and entertainment entities have been spun off into their own companies.
The Cablevision purchase marks the second time this year that Altice's founder, French-Israeli billionaire Patrick Drahi, has bought a large American cable company. In the spring, Altice bought Suddenlink for $9.1 billion.
Together, the new company will be the fourth-largest cable firm in the U.S., with 4.6 million customers in 20 states, according to Altice, with many of those customers in the Northeast.
"We believe that this is an expansion into the most attractive and affluent part of the United States," said Altice Chief Executive Dexter Goei on a Thursday morning conference call.
Cablevision's shareholders have approved the acquisition, which is expected to close in the first half of 2016.
Drahi said, "We will be in a stronger position, as in all other markets in which we operate, to deliver the best services, invest in the most advanced technology, and develop innovative products for the benefit of our customers."
Some are seeing the deal as a signal that Altice "also may have ambitions to become a wireless carrier," reports Brian Fung at The Washington Post. Analysts say that while cable is seen as heading for a decline, wireless is still growing.
Outlining other recent consolidations in the cable industry, Bloomberg reports:
"The U.S. pay-TV industry is consolidating rapidly. AT&T Inc. acquired DirecTV, the biggest satellite operator, in July for about $65 billion, including debt, and Charter Communications Inc., the company backed by John Malone, is scooping up Time Warner Cable Inc., the No. 2 cable provider, in a transaction valued at $79.2 billion."
The Altice deal also includes Lightpath, Cablevision's business services unit.
In addition to its TV division, Cablevision operates the Newsday Media Group, which publishes several newspapers in New York, including amNewYork and Long Island's Newsday. The company also owns News 12 Networks, which operates in the tristate area around New York City.