Altice has officially filed its application with the FCC to buy Cablevision, telling the FCC the deal has no anticompetitive issues, will reduce vertical integration of programming and distribution, and should get expeditious treatment.
The commission will still have to establish protective orders for how to deal with sensitive information, and set a comment cycle, but the deal is now in front of the commission officially, including the public interest statement.
Altice, a publicly traded Dutch company providing fixed and mobile voice, video and broadband (34.5 million subs worldwide) announced Sept. 17 that it had a deal to buy Cablevision for $17.7 billion.
Altice is also trying to buy Suddenlink, a deal it announced in June.
The combination of Suddenlink's 1.5 million subs — Altice's first proposed U.S. broadband video play — combined with Cablevision's 3.5 million would make it the fourth largest cable operator in the U.S.
In its comparatively brief filing — barely 23 pages — Altice said the deal should pose not problems and should get an expeditious hearing so it can close by a projected June 30, 2016 date.
Altice said there are no competition issues given Cablevision systems is already in the most competitive market in the country (Connecticut, New Jersey or New York).
It also said the deal will contribute to reducing vertical integration because the deal, while it does include the local news nets, does not include AMC Networks — AMC, SundanceTV, IFC and WEtv — and the MSG regional sports networks, which Altice is not buying.
The following are the company's bullet pointed arguments for the deal.
• "There is no anticompetitive effect from the Transaction. Cablevision operates a regional cable system serving approximately 3.1 million customers in the most competitive market in the country. Altice’s acquisition of Cablevision improves the competitive prospects for Cablevision in this market and poses no anticompetitive issues of vertical or horizontal consolidation in the domestic cable or broadband market.
• "Cablevision’s customers will benefit from Altice’s global expertise. Altice operates cable and wireless systems worldwide, and is a leader in technical innovation, network systems, IT, and management. Cablevision will benefit from the application of Altice’s global experience, which will benefit customers in the form of continued improvement in service, quality and value.
• "The Transaction will magnify Cablevision’s capacity to compete. Altice is a substantially larger company than Cablevision, and as such has extensive access to capital and the ability to pursue innovation on a significantly larger scale, distributing the benefits over a much larger global customer base. The scale advantages of Altice will benefit Cablevision customers with innovation that would be less accessible without the transaction. These benefits will be available without the deleterious effect of substantial increased domestic consolidation in cable or broadband.
• "The Transaction will reduce vertical integration. Altice’s acquisition of Cablevision excludes any interest in MSG Networks and AMC Networks, Inc., and thus reduces vertical integration in the cable television market by eliminating common control over these companies.
Altice will ultimately own 100% of Cablevision once the deal is done, but to follow the financial structure is not an easy read.
"Altice will acquire 100 percent of the share capital of Cablevision," the company told the FCC. "Altice has formed a chain of three wholly owned Dutch subsidiaries, with each subsidiary wholly owning the next and the lowest-level entity wholly owning a newly formed Delaware corporation, Neptune Holding US Corp. In turn, Neptune Holding US Corp. wholly owns Neptune Merger Sub Corp., also a Delaware corporation (“Merger Sub”). Merger Sub will be merged with and into Cablevision, after which point Merger Sub will no longer exist as a separate corporate entity. Cablevision will be the surviving corporation; it will be 100 percent directly owned by Neptune Holding US Corp. and 100 percent indirectly owned by Altice."
But wait, there's more, and it involves the Canada Pension Plan (CPP Investment Board) and BC Partners Holdings Ltd., which have an option to purchase up to a 30% non-controlling interest in Cablevision.