Charter Communications Inc. (CHTR) agreed to buy Cablevision
Systems Corp.'s (CVC) western cable systems, known as "Optimum
West," for $1.625 billion in cash.
Cablevision shares rose 5.6% during the regular session Thursday
after earlier reports of an imminent deal.
Cablevision bought Optimum West just two years ago for $1.4
billion. At the time, Cablevision's chief operating officer was Tom
Rutledge, who left the company in late 2011 to become chief
executive of Charter.
In a statement Thursday, Mr. Rutledge said Cablevision had
expanded Optimum West's customer base "through the execution of a
product and service strategy, which is the same as the one we
recently implemented at Charter."
Optimum West, which operates through a Cablevision subsidiary
called Bresnan Broadband Holdings LLC, provides television,
high-speed Internet and other communication services to roughly
360,000 customers in the Western U.S., including Montana, Colorado,
Wyoming and Utah.
A Charter spokeswoman said Bresnan's systems will have synergies
with other Charter regions because they cover smaller and mid-sized
communities rather than big urban markets.
In contrast, for Long Island-based Cablevision, buying Bresnan
roughly two years ago was a strategic and operational shift.
Bresnan's cable systems were located across the country from
Cablevision's densely concentrated New York metro market. One of
Cablevision's big strengths has always been that it is regionally
clustered, which has allowed it to be efficient in marketing and in
deploying services like digital cable and cloud-based digital video
recording faster than other cable operators.
Cablevision said Thursday that it had bought the systems because
it had seen the opportunity to increase the value of them by making
operational improvements. In 2010, Cablevision had outbid several
private-equity firms and rival cable companies, including Charter
and Suddenlink Communications, to purchase the Western systems from
an investment group led by Providence Equity Partners.
The companies said they expect the deal to close in the third
quarter of this year.
Charter said it will fund the acquisition with $1.5 billion of
committed bank financing to Charter Communications Operating, LLC,
and liquidity from cash on hand and its revolving credit
facility.
Charter's Class A shares were up by 38 cents to $81.01 after
hours.
Write to John Jannarone at john.jannarone@wsj.com
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