Cablevision Takeover: Who is Altice Founder Patrick Drahi?
The European giant that just struck a deal to purchase Cablevision is lead by a man that telecom mogul John Malone calls "a genius."
When Cablevision said Thursday it is selling itself for $17.7 billion, only close industry watchers weren't surprised that the buyer is European cable and telecom company Altice.
The company, founded by billionaire Patrick Drahi, made headlines earlier this year by agreeing to acquire U.S. cable operator Suddenlink for $9.1 billion before considering a second play, for Time Warner Cable, before John Malone’s Charter Communications snapped it up.
With the Cablevision deal, Drahi, born in 1963, has shown that he and his U.S. ambitions can't be ignored any longer. With Suddenlink and Cablevision, his Amsterdam-based Altice is suddenly the fourth largest cable operator in the U.S.
Wall Street and industry folks who have know him or followed his work describe him as a bold and aggressive dealmaker who has a reputation for being a relentless cost-cutter.
Discovery Communications CEO David Zaslav, who has met Drahi, tells THR that Drahi “has great ambition. He is a brilliant guy." After lighting up Europe, he is lighting up the U.S., he said. And he has a lot of energy, Zaslav says. "Wherever he goes, he brings energy," the Discovery boss explains.
Moroccan-born Drahi, a citizen of both France and Israel, is a sort of protege of Liberty Media and Liberty Global chairman Malone (in the 1990s he sold one of his companies to Malone), and he shares the U.S. mogul's financial acumen and focus on using debt financing to build businesses.
Says Macquarie Securities analyst Amy Yong: "Patrick Drahi is known for being ruthless.” She confirms that there are, indeed, "a lot of parallels" between Drahi and Malone in "terms of financial and operational strategies."
On a conference call in June, Malone called Drahi “a genius,” “my friend” and “a capitalist entrepreneur.” Asked about Altice's move into the U.S., Malone said Drahi was "taking advantage of today’s low interest rates." He did, though, lament that Drahi was driving up the cost of assets that Liberty might also have been interested in acquiring, including Time Warner Cable.
Last month, Liberty Media CEO Greg Maffei also lauded Drahi, who is founder and chairman of Altice while Dexter Goei runs the company as CEO.
"I think you have to give your pat to Patrick Drahi and Dexter Goei, how they've done a heck of a job rolling up the things that they've done," Maffei said. "One may argue or contest some of the prices they paid; they certainly pushed us perhaps a little bit higher on Time Warner Cable than we would have liked. But you have to say they're acting quite rationally given the power of their currency and the model that they've developed and their ability to find cheap financing. So I think that they're a fearsome competitor, and I tip my hat to both of them."
Though he has been building his fortune quietly for years, working his way up from selling cable packages door-to-door in France, Drahi was a relative unknown in that country until Altice became the no. 2 provider of mobile phone and Internet services by acquiring telecom giant SFR from Vivendi last year.
After several more high-profile deals – not to mention accusations of tax avoidance -- Drahi has become a media personality in France even as he tries to maintain a low profile, studiously avoiding society events as he bounces between his residences in Paris, Tel Aviv and Geneva, Switzerland.
He’s nevertheless the subject of frequent public and government criticism for living and keeping his business interests abroad. During his bid to buy Virgin Mobile in France, then-minister of digital economy Fleur Pellerin personally asked him to repatriate to France, which he declined to do, preferring to keep his primary residence in Geneva.
Altice now mirrors Drahi’s global lifestyle; it’s best known for its businesses in France while its stock is listed on the Amsterdam exchange. Drahi’s personal holding company is in the island tax haven of Guernsey, which lacks many of the reporting requirements that are typical elsewhere.
In Forbes' most recent rankings of global billionaires, he is No. 58 with $15 billion, not too far behind Microsoft co-founder Paul Allen ($17.9 billion) and Dish Network founder Charlie Ergen ($17.2 billion). That also makes him the sixth-richest person in France in the annual rankings of magazine Challenges.
In fact, he’s a recent addition to the Challenges list because he was kept off of it in 2014 after reports surfaced saying he had given up his French citizenship, which he says is untrue.
Drahi founded Altice in 2002. The company provides broadband and pay-TV services in France, Belgium, Luxembourg, Switzerland, Portugal, Israel, the French West Indies and Indian Ocean area and the Dominican Republic. And with Suddenlink and Cablevision, the U.S.
Drahi created the Altice Media Group earlier this year, acquiring weekly publications L’Express and L’Expansion, as well as cinema, culture and electronics titles and a free entertainment weekly, A Nous, that is handed out in Paris subways. That has made Altice Media the sixth-largest media company in France.
Also part of the new Altice Media is I24, the Israeli answer to Al-Jazeera, which broadcasts in English, French and Arabic. And Drahi also created a separate company in partnership with founder Alain Weill to take over NextRadioTV, France’s top news network and the only one that is profitable.
Despite not seeking attention, Drahi seems to attract controversy with his aggressive business style.
His deal for SFR was accompanied by cost reductions that some categorized as “brutal,” and the company’s advertising has come under fire for false claims about network speeds. The accusations are currently under investigation by Nathalie Homobono, France’s director general for competition policy, consumer affairs and fraud control.
The competition authority is also investigating claims that SFR and Numericable began working together before their merger was approved by regulators, which could result in fines of up to $645 million (€570 million).
Drahi has had a public rivalry with former friend Xavier Niel, head of French telecom companies Iliad and Monaco Telecom. The two had been known to dine together twice a year, but Niel has refused to speak to Drahi since an unfavorable article appeared in Israeli newspaper Yediot Aharonot during his acquisition of mobile licenses in the country. The newspaper is owned by a relative of Drahi, and Niel argued Drahi had a hand in the story.
So what's next for Altice and Drahi? The company didn't say on a call about the Cablevision deal on Thursday. Said Wells Fargo analyst Marci Ryvicker: "We don't think it's done acquiring in the United States."
And Wunderlich Securities analyst Matt Harrigan says Altice is focused on the “quad play,” whereby U.S. households will purchase telephone wireless and landline services along with Internet access and cable TV all from Altice.
With assets mounting in Paris and New York, Harrigan says Drahi is positioned "in two of the world's most important cities with respect to both consumer affluence and Fortune Global 500 headquarters presences."