Macquarie Capital media analyst Amy Yong predicted a strong round of consolidation as the weather heats up and as new IPOs from WideOpenWest and Altice USA provide new currencies for deals.
“Get ready for a hotbed of activity in the space, brought on by the back-to-back debut of WOW and Altice [USA] on the NYSE and cable-hungry Charter and (maybe) Verizon,” Yong wrote in a note to clients. “We expect Charter, along with overbuilder WOW, to have the most to gain as they drive the next round of consolidation.”
Charter started the consolidation frenzy in 2013 with its relentless pursuit of Time Warner Cable. Despite a 14-month sideline—when Comcast stepped in with a bid for TWC that was accepted by the company but abandoned after it became apparent regulatory approval would not come—Charter ended up with the prize, purchasing TWC and Bright House Networks in two deals with a combined value of more than $90 billion. That deal was followed by the entrance of European telecom company Altice into the U.S. market, purchasing Suddenlink Communications in 2015 for $9.1 billion and following that up with the $17.7 billion purchase of Cablevision Systems last year. In the meantime, several smaller deals were completed—TPG Capital spent $2.25 billion on RCN and Grande Communications in August and followed up that deal with an agreement to buy Wave Broadband for $2.36 billion in May.