Splitsville for Comcast-Insight
Will divvy up cable systems in their joint ventureCable operators Comcast Corp. and Insight Communications Co. have agreed to divide cable systems they have owned in a joint venture, with Comcast winning control of markets with more than 680,000 basic-cable subscribers and operating cash flow of about $290 million.
The companies each have been holding 50% in the Insight Midwest partnership, with Comcast inheriting its stake in the acquisition of AT&T Broadband a few years ago.
As cable operators and media companies have streamlined their asset portfolios in recent years, Wall Street and industry observers have been predicting a split-up of the Insight Midwest systems.
Comcast said the deal will allow it to "convert its interest in the joint venture from a passive investment to a direct ownership in cash-flow-generating cable systems."
For 2007, Comcast expects the systems to generate about $290 million in operating cash flow.
In the transaction, the cable giant will get control over cable systems serving Illinois customers in Rockford/Dixon, Quincy/ Macomb, Springfield, Peoria and Champaign/ Urbana as well as Indiana customers in Bloomington, Anderson and Lafayette/Kokomo.
As of Dec. 31, the systems passed 1.2 million homes and included about 684,000 basic-cable subscribers, 296,000 digital customers and 300,000 high-speed Internet users, the companies said.
"We are very pleased to be receiving such well-managed systems from Insight," Comcast COO Stephen Burke said. "These customers are in key markets in which Comcast already has a presence."
Privately held Insight will get its hands on cable systems serving Kentucky customers in Louisville, Lexington, Bowling Green and Covington as well as subscribers in Evansville, Ind., and Columbus, Ohio.
As of Dec. 31, the markets passed 1.3 million homes and included about 639,000 basic, 325,000 digital and 308,000 high-speed Internet users.
"This is a logical split for both companies," Insight CEO Michael Willner said. "Insight will operate a very efficient cluster in Kentucky, where it will continue to be the largest operator in the state, and in neighboring southern Indiana and in Columbus, Ohio."
After the close of the transaction, which is expected by year's end, Comcast will be responsible for $1.35 billion and Insight for $1.26 billion of partnership debt.
Insight was taken private by private-equity firm Carlyle Group in 2005 in a $2.1 billion deal.