Cable One to Buy NewWave
Cable One will buy fellow cable operator NewWave Communications for $735 million in cash, it said in a news release Wednesday. NewWave's network passes roughly 428,000 homes in in seven states, Cable One said, and the two will have more…
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than 1.2 million total primary service units. Cable One said it expects to close on the deal in Q2. In a note to investors, MoffettNathanson analyst Craig Moffett said NewWave's strategy "isn't entirely dissimilar to Cable One's own, suggesting that there may not be too much heavy lifting required to align the two" and pointed to NewWave's video penetration of 24 percent. With NewWave's broadband penetration not much better at about 26 percent, he said, a lot of the value of the deal presumably comes from raising penetration and probably prices. Macquarie analyst Amy Yong wrote investors that Cable One/NewWave likely will be followed by numerous cable deals this year, since Altice and Charter Communications desire to grow, while potential takeover targets could be Mediacom and Cox Communications. Such consolidation, along with industry innovation, likely will mean the three largest cable system operators will end up with more than 90 percent of the video market share over the next decade, Yong said.