Orion Cable takes over PrimaCom

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COLOGNE, Germany -- In a further sign of consolidation in the German cable market, Germany's third-largest cable operator, Orion Cable, signed a deal Monday to take full control of regional cabler PrimaCom.

The deal nearly doubles Orion's stake in PrimaCom from 42% to 82%. As a result, Orion takes over PrimaCom's 1.5 million subscribers, bringing its total to about 5 million in Germany.

What makes PrimaCom particularly attractive is that the bulk of its subscribers are last-mile, meaning the company controls the final access lines to consumers -- something that is not always the case for German cable firms.

Orion and its corporate parent, Luxembourg-based investment group Escaline, cleared the last major hurdle in the race for PrimaCom in September when they signed a deal with Germany's No. 1 cable company, Kabel Deutschland.

Orion gave KDG 1.2 million of its German cable subscribers in exchange for €585 million and paid KDG €38 million for KDG's 18% stake in PrimaCom. KDG also withdrew its competing takeover offer for PrimaCom, leaving Orion as the sole bidder.

Observers see the recent consolidation as a sign that Germany's money-losing cable TV market, the second-largest in the world with 18 million cable households, might be turning a corner.

Germany has largely been a jungle of small cable players since monopolist Deutsche Telekom sold off its cable assets in the late 1990s, and companies moving into the sector have bled a lot of red ink (HR 9/21).

Helping the market besides consolidation is the emergence of the triple-play bundle of video, high-speed Internet and telephony services that also has boosted the fortunes of U.S. cable operators.

KDG is the country's cable market leader with 9 million homes.
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