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Cable Operators

After Dry Spell, Rainmakers’ Relief

2/27/2012 1:03 PM Eastern

After what seemed like a long hiatus in the wake of the overall economic meltdown of 2008, the deal market has been revitalized. Major transactions — like the $37.5 billion NBCUniversal joint venture between Comcast and General Electric (which closed in January) to Time Warner Cable’s agreement in December to acquire Insight Communications’ 700,000 subscribers in the Midwest for $3 billion — characterized 2011. In between were smaller deals, like Suddenlink Communications’ $350 million purchase of NPG Cable and New Wave Communications’ sale of 70,000 subscribers to Time Warner Cable for $260 million.

The total completed and disclosed deal value increased to $52 billion in 2011 from $27 billion in 2010, according to PriceWaterhouseCoopers. While the bulk of that increase was due to the Comcast-NBCUniversal deal, PwC estimated that excluding Comcast/NBCU, the average deal value rose 25% to $160 million in 2011 from $128 million in 2010. All this on fewer deals — 801 in 2010 versus 687 in 2011, according to PwC.

In many ways, there hasn’t been a better time in recent memory to tap the financial markets.

But having access to capital and actually getting money are two different things. For most in the cable industry, the best (and sometimes the only) way to tap into that cash is through an intermediary.

With that in mind, Multichannel News has compiled our 2012 Money All-Stars, a list of some of the top investment bankers, private-equity players and fi nancial advisers in the cable space.

This list is by no means comprehensive — to tally all the noteworthy financial players in the space would literally require volumes. But the men and women on this list represent a crosssection of financial executives on the leading edge of cable finance for both large cable companies and smaller midsize operators. Care was taken to give adequate representation to the banking, private-equity and advisory sides of the table, and deals brokered, engineered and represented by the executives listed run the gamut from large-cap media giants like Comcast and NBCU to small-market operators like Harron Communications.

While transactions have been gaining steam, most of the players believe more opportunities are on the horizon, especially as past investments at some private-equity concerns approach maturity.

UBS vice chairman and head of investment banking Aryeh Bourkoff , who has had a hand in practically every major cable deal for the past few years, was encouraged by cable’s strength in tough economic times, but expects the major MSOs to take it slow on the M&A front in 2012.

“We would expect most of the major MSOs to be more operationally driven in 2012 vs. deal-oriented,” Bourkoff said. “The mid-market cable companies are where the deals will be focused.”

But whatever the climate, chances are that any cable operator looking to buy, sell or raise money in the near future will run into at least one of the executives on the following pages.

And with that, here are Multichannel News’ 2012 Money All-Stars.

GARRETT BAKER

Title: President, Waller Capital Partners

Background: Baker is a former investment banker at Bear Stearns, joining Waller Capital Partners in 1998. An avid dealmaker — he initiates and leads cable and wireless M&A activity in investment banking at Waller — Baker was named a partner at the fi rm in 2005 and was named president in 2009. He leads all of the firm’s cable M&A activity and also oversees its day-to-day operations. During his career, he has completed more than 60 M&A transactions valued at more than $15 billion.

Notable Deals: Recent cable M&A transactions include representing RCN on its sale to ABRY Partners; US Cable on its sale to Midcontinent, Baja and Charter Communications; Vision Communications on its sale to Eatel; WideOpenWest on its sale to Avista Capital; Time Warner Cable on its non-core divestiture to Windjammer Communications; Everest Broadband on its sale to SureWest; Choice Cable on its sale to Spectrum Equity/Patriot Media; NewWave on its acquisition of non-strategic assets from Charter; Grande Communications on its recapitalization; The Blackstone Group on the sale of Sigecom; Jet Broadband on the acquisition of Suddenlink’s Virginia assets and the subsequent sale of JetBroadband to ShenTel; Providence Equity on the sale of Northland Cable to Metrocast/ Harron; and Alameda Telecom on its sale to Comcast.

2012 Outlook: “The cable community boasts a number of midsized, privately-owned operators who have achieved extraordinary results on smaller platforms. The re-emergence of the largest MSOs as active buyers of these midsized operators highlights the additional value that can be created through consolidation. With continued interest from private equity and telcos, the cable M&A market is stronger than it’s been in over fi ve years.”


LOUIS BERTOCCI

Title: Partner, BV Investment Partners

Background: Bertocci joined BV Investment Partners in 1996 as an associate and brings more than 18 years of banking and principal investing experience to the firm. Previously, he was an assistant vice president in Fleet Bank’s Specialized Lending division, where he focused on sports and entertainment financings.


Notable Deals:
En-Touch Systems; Harron Communications; Rural Cellular Corp.; Vision Communications; Vista III Media.

2012 Outlook: “I think, for the cable world, it’s a good environment. There are going to be more deals happening.”

ARYEH BOURKOFF

Title: Vice Chairman/ Head of Investment Banking, Americas, UBS

Background: Named vice chairman of UBS Technology’s media and telecom investment banking unit in 2010, Bourkoff last year became head of all investment banking operations in the Americas. Previously, he had headed the media and communications research group, specializing in the cable/satellite and entertainment sectors. In 2005, he was the top-ranked analyst in his sector in Instiutional Investor’s equity, fixed-income and hedge-fund surveys in the same year. For seven years he was recognized as the No. 1 cable and satellite fixed-income analyst on Institutional Investor’s fixed-income all-America research team.

Bourkoff was also named to The Wall Street Journal’s annual “Best on the Street” equity analyst rankings, nabbing the top spot in the “Broadcasting and Entertainment” category.

Before joining UBS, Bourkoff was a senior cable and telecommunications high-yield research analyst at CIBC World Markets. He was also a member of the high-yield research group at Smith Barney.

Notable Deals: Comcast’s $37.5 billion NBCUniversal joint venture; the $21 billion workout of Charter Communications; the $3 billion sale of Insight Communications to Time Warner Cable; the $5.3 billion sale of Germany’s Unity Media to Liberty Global; the $1.4 billion sale of Bresnan Communications to Cablevision Systems; Liberty Media’s $530 million, 40% acquisition of Sirius XM Satellite Radio; and the $500 million deal in which NBCUniversal, CBS and Robert Redford sold the Sundance Channel to Cablevision Systems.

2012 Outlook: “The M&A market for cable is still robust amidst a challenging economic and regulatory backdrop, given a strong private-equity focus and fi nancing capability. We would expect most of the major MSOs to be more operationally driven in 2012 vs. deal-oriented. Th e mid-market cable companies are where the deals will be focused.”

GERALD CARDINALE

Title: Managing Director, Merchant Banking division, Goldman Sachs & Co.

Background: Cardinale is a partner in the Merchant Banking division (MBD), where he shares responsibility for the Americas Corporate Equity investing business and heads the firm’s GS Direct investment activities. He is a member of the Partnership Committee, MBD’s Investment Committee and the Pine Street Board of Directors, and he served on the Business Standards Committee working group on education, training and business ethics. He joined Goldman Sachs in 1992 as an analyst in Corporate Finance and later worked in the private-equity and advisory groups in Hong Kong and Singapore before returning to New York in 1997. He was named managing director in 2002 and partner in 2004.

Prior to joining the firm, Cardinale was a visiting research fellow at the Japan Institute of International Affairs, where he advised on foreign policy initiatives with APEC and the United States for the Japanese Foreign Ministry.

Notable Deals: Wrote the business plan for and funded the creation of the YES Network, in partnership with YankeeNets, and remains on the board of directors at YES, which is still owned by GS Capital Partners and the original founding investors; teamed up with Jerry Kent and Oaktree Capital Management in 2003 to recapitalize Classic Cable, later buying systems from Cox Communications for $2.5 billion, forming Suddenlink Communications now the seventh largest MSO in the country; led the $3 billion take private-acquisition of Alliance Atlantis, one of Canada’s premier diversifi ed media companies, in 2007 in partnership with Canadian partner CanWest Global.

2012 Outlook: “We expect 2012 to be the first year since the financial crisis that we see a tangible return to more consistent and reliable operating and financial performance across the media landscape. While we’ve seen some strategic consolidation in cable over the last two years, cable companies took a bit of a breather in the latter half of 2011. … Strategics should jump back into the M&A ring this year, with competitive interest from the big private-equity players who tend to seek the consistent cash generation and competitive dominance of cable for their leveraged acquisition strategies.”

BRIAN DEEVY

Title: Co-Head, Communications, Media and Entertainment, RBC Capital Markets

Background: Deevy is responsible for strategic development of the CME Group’s business, which includes mergers and acquisitions, private equity and debt capital formation and financial advisory engagements. He directs the group’s efforts for clients across sectors of the communications industry worldwide, including cable, satellite/DBS, programming services, wireline and wireless telecom, telecom infrastructure, Internet communications, Web hosting, Internet content, radio and TV broadcasting, out-of-home advertising, publishing, software and technology. Over his tenure with RBC Daniels and now RBC Capital Markets, he has led the firm to a performance of more than 1,700 completed transactions in these sectors valued at more than $100 billion. In addition to his financial expertise, Deevy has been inducted into the Cable TV Pioneers, has received the NCTA’s Vanguard Award for Associates, and serves on the board of The Cable Center. Prior to joining RBC Daniels, Deevy was with Continental Illinois National Bank.

Notable Deals: Suddenlink Communications’ $350 million acquisition of NPG; Sale of NewWave Communications systems to Time Warner Cable for $260 million; Cablevision Systems’ sale of $1 billion in senior notes; Starz’s $1.5 bil lion senior secured credit facility.

MICHAEL DOMINGUEZ

Title: Managing Director, Providence Equity Partners

Background: Dominguez is based in the firm’s Providence, R.I., office and has more than 18 years of experience investing in and advising a wide range of media and communicat ions companies. He is current ly a director of AutoTrader.com, CDW Inc., GLM LLC and ZeniMax Media. He has also served on the boards of Bresnan Communications, Pan- AmSat and Tele1 Europe.

Prior to joining Providence in 1998, Dominguez worked for Salomon Smith Barney in corporate f inance, where he focused on the communications industry. Previously, he held posit ions with Morgan Stanley and Andersen Consulting.

Notable Deals: Led Providence’s sale of Bresnan Communications to Cablevision Systems for $1.37 billion in 2010, the successful culmination of a seven-year partnership between Providence and Bill Bresnan, who together purchased cable systems in Montana, Wyoming and Colorado from Comcast in 2003; led Providence’s 2010 investment in AutoTrader.com, a partnership with AutoTrader.com’s majority owner, Cox Communications. Since the time of Providence’s investment, AutoTrader.com has completed four acquisitions, including Kelly Blue Book and vAuto.

2012 Outlook:
“We expect to see continued M&A activity in the middle market in North America, driven by the rising costs of programming and the desire to achieve other scale benefits. Internationally, we expect to see activity in the emerging markets, with companies raising capital to fund network expansion or consolidate fragmented systems.”

ERIC FEDERMAN

Title: Managing Director, Global TMT group/Co- Head of US Media, Credit Suisse.


Background:
Federman’s coverage responsibility includes the U.S. Cable sector, the U.S. motion picture exhibitor sector and several other diversified media companies. Eric joined Credit Suisse in 2003 after spending 11 years at Merrill Lynch in the Global Media Group. Eric has advised and financed clients in the cable and pay TV industry for 20 years.

Notable Deals: Advisory transactions in the cable sector have included the sale of Bresnan Communications to Cablevision Systems, Knology’s acquisition of PrairieWave, the sale of WideOpenWest to Avista Capital Partners and Comcast’s acquisition of AT&T Broadband; recent lead-left financing transactions in the cable sector have included transactions for Charter Communications, Atlantic Broadband, Knology and WideOpenWest.


JAY GROSSMAN

Title: Managing Director/ Co-CEO, ABRY Partners

Background: Jay Grossman has been with ABRY for 16 years, joining the firm in 1996 after stints as an investment banker with Prudential Securities and at Kidder Peabody. His areas of focus have included broadcasting, cable, satellite communications, rural telephony, data centers and business services. ABRY has been on both the buying and selling sides of the deal table — it was an early backer of both Avalon Cable, which sold out to Charter Communications in 1998 for a tidy profit, and WideOpenWest, selling its interest to Avista Capital Partners in 2005. Most recently, ABRY has been a buyer: It backed Ed Holleran and David Keefe in their creation of Atlantic Broadband in 2004 and was a participant in RCN’s $1.2 billion refinancing that took the overbuilder private in 2010, to name a few deals.

Notable Deals: Avalon Cable, WideOpenWest, Atlantic Broadband, RCN, Grande Communications, Hometown Cable

2012 Outlook: “The fundamentals of cable are still healthy. If the economy improves a bit, there will be some additional M&A to occur.”

JESSICA KEARNS

Title: Head of the J.P. Morgan TMT Leveraged Finance Group

Backround: Kearns joined J.P. Morgan in 1997 and has more than 18 years of investment-banking experience. She has been exclusively focused on the TMT sector and the debt product during her investmentbanking career. Jessica has had a bookrunner position on more than $9 billion of high-yield debt, $4 billion of syndicated loans, and $6 billion of Amend and Extends for the cable sector from 2009 through 2012 year-to-date.

Prior to joining J.P. Morgan in 1997, Kearns worked as a vice president for TD Securities in the Communications Finance group. Jessica also spent two years as an econom-ic research analyst for the Federal Reserve Bank of Boston.

Notable Deals: Bookrunner on $2.7 billion credit facilities closed February 2012 and high-yield bond transactions totaling $1.825 billion issued via three separate off erings from 2009-2011, for Suddenlink Communications parent Cequel; bookrunner on every bond off ering executed by Mediacom Communications, most recently the $250 million of 7.25% notes issued at Mediacom LLC due 2022, issued in February 2012; led debt-for-debt exchange and spinoff of AMC Networks and was lead left on more than $2 billion of loans; bookrunner on $500 million of senior notes due 2018 used to repay existing bank debt and pay a dividend to shareholders for Insight Communications.

2012 Outlook: “The continued robust debt markets, with attractive terms and pricing, will continue to fuel potential consolidation in the cable industry.”

JEFFREY MARCUS

Title: Partner/Head of Media, Crestview Partners


Background:
A longtime media entrepreneur, Marcus is one of the pioneers of the cable industry — he built Marcus Cable into the largest privately-held cable company in the country before selling it to Charter Communications in 1998. He joined Crestview in 2004. He heads up media efforts for Crestview, a middle-market private-equity firm with about $4 billion in assets under management focusing on the media, energy, financial services and health care industries.

Notable Deals: Investments in One Link, a cable system serving 135,000 customers in Puerto Rico; interests in Insight Communications, a 700,000-subscriber MSO that has agreed to be sold to Time Warner Cable for $3 billion; investment in Charter.

2012 Outlook: “After being in and around the cable business for more than 44 years, I’m still a believer in the power of the pipe. Cable continues to evolve as the premier provider of triple-play services, and I believe it will continue to thrive in an IP world. We have great confi - dence in our cable investments and would consider expanding our commitment to the industry if the right opportunity presented itself.”

JAMES MCVEIGH

Title: Managing Director, Technology, Media & Telecom Corporate & Investment Banking, Bank of America Merrill Lynch

Background: Joined BofA/ Merrill in 2003 after five years with Credit Suisse/ DLJ in the Investment Banking group and three years with the Large Cap and Technology group at Solomon Brothers. McVeigh works primarily on media and new media transactions and has advised clients on M&A transactions and raising capital in the debt, equity and hybrid capital markets.

Notable Deals: Insight’s $3.0 billion sale to Time Warner Cable as adviser to Insight, Carlyle and the board of directors; NBCUniversal’s $1.025 billion acquisition of Blackstone’s stake in Universal Th eme Parks as adviser to Comcast; Mediacom’s $3.85 billion go-private transaction as adviser to chairman and CEO Rocco Commisso; Comcast’s $37.25 billion JV with General Electric, including NBCUniversal and cable assets, as adviser to Comcast.

2012 Outlook: “In the future I think the industry will see continued consolidation as operators continue to realize network-scale benefits; you will also see an increase in the types of telecom services off ered that should drive further consolidation in the telecom services space as these services become a larger percentage of operators’ total revenues. Cable operators will also become increasingly competitive and win share back from the over-thetop video providers as they deepen their content libraries, enhance their digital interfaces and deploy services like TV Everywhere.”

CHRISTINA MOHR

Title: Managing Director, Mergers & Acquisitions, Citigroup Global Markets

Background: In addition to working with the Global Media Banking unit, headed by Dan Richards, Christina has been principally responsible for a number of the firm’s largest M&A transactions.

Christina has more than 30 years of investment banking experience. She spent 13 years at Lazard Fréres, prior to joining a predecessor fi rm of Citigroup in 1997.

Notable Deals: Cablevision’s acquisition of Bresnan Communications; the sale of Tribune Co.; the sale of Newsday to Cablevision Systems; the purchase of Digitas by Publicis; National Amusements’ restructuring and sale of select Viacom and CBS holdings; and Cox Enterprises’ take-privates of both Cox Radio and Cox Communications.

SAM POWERS

Title: Managing Director, UBS


Background:
Powers joined UBS in 1998, after graduating from Yale University, initially serving as an analyst and associate at UBS predecessor PaineWebber. He works under Aryeh Bourkoff ’s television group (see page 20), with primary coverage sectors including cable MSOs, cable networks and telecom services.

Notable Deals: Virgin Media U.K.; Insight Communications’ pending sale to Time Warner Cable; advised the ad hoc committee of Charter Communications on its restructuring; advised Unity Media on its sale to Liberty Global; counseled bankrupt Adelphia Communications on its sale to Time Warner Cable and Comcast; and helped both Patriot Media and Susquehanna Media on each of their sales to Comcast.

DAN RICHARDS

Title: Managing Director/ Global Head of Media Banking, Citigroup Global Markets

Background: In addition to overseeing Citigroup’s media efforts, Richards has principal relationship responsibility and oversees transaction execution for many of Citigroup’s largecap media and communications clients. Richards has 22 years of investment banking experience, having spent 11 years at Merrill Lynch prior to joining Citigroup in 2000.

Notable Deals: Time Warner Cable’s pending acquisition of Insight Communications; Cablevision’s acquisition of Bresnan Communications; GE’s sale of NBCU to Comcast; Time Warner’s spinoff of Time Warner Cable; National Amusement’s restructuring and sale of select Viacom and CBS holdings; Discovery’s acquisition of a $500 million stake held by Advance/Newhouse; Time Warner’s acquisition of Chilevision and investment in Central European Media; and Cox Enterprises’ deals to take both Cox Radio and Cox Communications private.

JOHN WALLER III

Title: Founder/chairman Waller Capital Partners


Background:
Waller founded Waller Capital in 1982 after a career as a finance executive at Time Inc., where in 1978 he helped manage the early development of Home Box Offi ce. At Waller, he and his team initiated the creation of billions of dollars of value by raising startup capital for new cable operators, identifying acquisitions and sources of new growth capital, and selling the assets to larger, strategic operators when the owners were ready to exit. During the 1980s and early 1990s, Waller was personally responsible for closing more than 100 cable M&A transactions.

He continues to manage Waller’s daily eff orts and since founding the firm has been personally responsible for over $25 billion in transactions. He was awarded the NCTA’s Vanguard Award in 1997 and elected a Cable TV Pioneer in 2004.

Notable Deals: Grande Communications on its sale to ABRY Partners; WideOpenWest on its sale to Avista Capital; Time Warner Cable on its non-core divestiture to Windjammer Communications; Centennial Dominicana on its sale to Trilogy International; Everest Broadband on its sale to SureWest; Choice Cable on its sale to Spectrum Equity/Patriot Media; New Wave on its acquisition of nonstrategic assets from Charter Communications.


2012 Outlook:
“In my 30 years in cable investment banking, I have never seen a more exciting time to put large amounts of capital to work. Cable has proven resilient through the biggest recession in 80 years, is turning the corner on the competition and has huge upside in the commercial business and other advanced services.”

RANDY WELLS

Title: Managing Director, RBC Capital Markets

Background: Randy Wells provides M&A and banking services throughout the United States, primarily to midsize and larger cable/broadband and telecom companies. He has advised clients on a wide range of strategic engagements involving more than 200 transactions with an aggregate value in excess of $15 billion. In addition to representing both privately-held and larger publicly-owned broadband companies with the sale of their properties, he has assisted numerous buyers with growth strategies through acquisitions and joint ventures in selective markets. He has also been active in raising both private and public debt and equity for a number of broadband companies throughout the U.S. Wells joined RBC Daniels, now RBC Capital Markets, in 1988 after a career in real estate, and restaurant franchising and management.


Notable Deals:
Trades involving cable systems owned by AT&T, Charter Communications, CableOne, Cox Communications, Buford Television, Wave Broadband, Time Warner Cable and Suddenlink.

September