Comcast Wants to Break Up Insight Partnership
By John M. Higgins -- Broadcasting & Cable, 9/20/2006 6:27:00 PM
Comcast Corp. is looking to break up its partnership with Insight Communications, taking back systems serving around 700,000 subscribers and leaving Insight a much smaller company.
Speaking after a presentation at Goldman Sachs’ Communicopia media investor conference, Steve Burke said that Insight is the largest remaining partnership interest that Comcast wants to unwind. Comcast had a series of joint ventures with other operators, all acquired along with AT&T Broadband, which in turn inherited them from Tele-Communications Inc. When TCI had financial and operating problems in the late 1990s, then-president Leo Hindery took systems in regions where TCI wasn’t the dominant operator and combined them with smaller companies that happened to be bigger local players. That way, TCI could shrink its corporate overhead and the other operators run the systems.
The downside is that the revenue and operating cash flow from those partnerships don’t show up on Comcast’s income statements. “When we took over AT&T Broadband we looked at it and said `we don’t like being in partnerships’…We think we ought to get 100% of the cash flow on our balance sheet. So we’ve been unwinding them, and Insight is the last big one.” Insight’s markets include Indianapolis, Louisville, and Rockford, Ill.
Many industry executives have presumed that Comcast will ultimately buy all of Insight, which went private last year and is worth nearly $5 billion . “You never say never, but the most likely scenario is that we split it.”
Burke also elaborated on Comcast's pursuit of wireless spectrum in a recent auction by the Federal Communications Commission. Comcast was a leading backer of SpectrumCo, a consortium of cable operators and cellular phone company Sprint. The consortium was the third-largest bidder, spending $2.4 billion for a slice of spectrum covering virtually the entire country.
Burke says that Comcast isn't getting into the cell phone business. Instead, the company is hedging its bets that wireless data or video may become an important component offerings to consumers buying video, telephone and wired Internet services. For example, consumers may eventually demand to have mobile Internet service in the same package as their wired service. "We don't want to be in a position where Verizon or AT&T has a product like that," and Comcast doesn't, Burke says.
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