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Cable’s Dynamic Deal-Makers

10 NAMES TO WATCH IN WHAT COULD BE A BIG YEAR FOR M&A 2/17/2014 12:00 AM Eastern

Comcast’s surprise deal to acquire Time Warner Cable last week for $45.2 billion (excluding debt) has validated the consolidation frenzy that has swept through the industry ever since John Malone pumped $2.6 billion into Charter Communications last March. While Comcast’s coup may have stalled Malone’s plans for cable dominance for the moment, the larger MSO’s plans to shed 3 million subscribers as part of the deal spur what has already been a healthy deal market.

Cable companies have been trying to get bigger to help curb programming costs and fend off deep-pocketed competitors like Verizon Communications’s FiOS TV and AT&T U-verse. Couple that with a continued strong rise in cable stocks and ready and cheap access to capital, and you have the makings of another strong year for deals.

Time Warner Cable’s $600 million purchase of data company DukeNet underlined the importance of commercial transport services to cable operators. Traditional systems deals were led by Charter’s $1.6 billion purchase of Optimum West (the former Bresnan Communications) in July.

New players invested in cable, including private equity boutique GTCR, which formed Rural Broadband Investmens to focus on small, secondary market operators; and Brown Brothers Harriman, which backed former Bresnan Communications executives Jeff DeMond and Andrew Kober in their new cable venture, Vyve Broadband.

More than ever, knowing the top financial players and deal-makers in the sector is important for small operators as well as mega-MSOs. New technologies and the continued success of broadband are expected to continue to drive deal-making this year and beyond.

Multichannel News, for the third year, is profiling a new group of the top performers in the space. It is neither a ranking (they are listed alphabetically) nor is it intended to be all-inclusive. But given the renewed focus on consolidation in the business, chances are cable operators of all sizes and shapes will run into at least one of these money mavens.

Kristin Allen

Title: Managing Director of Credit Suisse and Vice Chair of Investment Banking

Background: Allen started at First Boston in the Investment Banking Generalist Area and then moved to the High Yield Group. She has been in the Media Group since 1990. Prior to joining the bank full time in 1987, Allen was a summer associate at First Boston in 1986. She was also an analyst at Morgan Stanley in their mergers and acquisitions division from 1983 to 1985. Allen received her bachelor’s degree from Brown University and her M.B.A. from the Amos Tuck School at Dartmouth.

Notable Cable Deals: Allen and Credit Suisse have worked with Suddenlink Communications through all stages of its growth, serving as lead book manager on the initial $3.3 billion financing commitment for the company and the 2006 acquisition of systems from Cox and Charter Communications. In 2012, CS acted as exclusive adviser to BC Partners and CPP Investment Board on their $6.6 billion acquisition of Suddenlink. In addition to Suddenlink, Allen represented the sponsors (Providence Equity, Madison Dearborn, TPG, THL and Saban Capital) in their $14 billion acquisition of Univision Communications in 2007.

Outlook for 2014: “We expect 2014 to be transformational in many respects for the cable sector. Technologies are evolving at a rapid pace and the competition among them is intense. Established cable companies are well-positioned in this changing landscape.”

Mark Bush

Title: Managing Director/Chairman — Technology, Media & Telecom, BofA Merrill Lynch

Background: Bush has more than 22 years’ experience in investment banking, beginning his career at Bear Stearns before joining Merrill Lynch in 1998. In addition, he has held various leadership roles over the years and currently serves as chairman of the firm’s global TMT practice. Throughout his career, he has specialized in the Telecommunications and Media sectors and has lead an array of advisory and financing transactions across the space. He received his MBA from Columbia Business School ,where he was a member of Beta Gamma Sigma, and his bachelor’s degree from The College of William and Mary.

Notable Cable Deals: Specifically within the cable sector, Bush has worked on multiple transactions, including Charter Communications’ current approach to Time Warner Cable; the $3.2 billion minority investment from a consortium (which consisted of Comcast, Time Warner Cable, Advance/Newhouse, Intel and Google) into a joint venture between Sprint and Clearwire; the $1.2 billion sale of Tel-Cove (formerly Adelphia Business Solutions) to Level 3; the $1.4 billion purchase of Bresnan Communications by Cablevision Systems; and the $1.6 subsequent sale of the same asset to Charter Communications, as well as Cablevision’s $4.9 billion spin of AMC Networks and its $1.8 billion spin of MSG.

Outlook for 2014: “Obviously cable continues to be at the forefront of overall M&A activity given the unique and strategic nature of the assets in this sector. Given this high level of strategic relevance, combined with the continued strong support in the capital markets for the sector generally, I expect prospects for companies in the cable sector to continue to be very bright and activity level to continue to be high.”

Philip Canfield

Title: Managing Director, GTCR

Background: Canfield joined GTCR in 1992 and is currently a managing director of the firm. He previously worked in the corporate finance department of Kidder, Peabody and Co. He holds an MBA from the University of Chicago and a BBA in finance with high honors from the Honors Business Program at the University of Texas.

Notable Cable Deals: Canfield is co-head of the Information Services & Technology Group at GTCR and has been focused on building this area for GTCR since 1996. Phil is currently a director of Sorenson Communications, Zayo Group, IQNavigator, Global Traffic Network, OneSource and Rural Broadband Investments. He has played a leadership role in a number of past investments involving AppNet, Transaction Network Services, DigitalNet, Cellnet and Solera.

Outlook for 2014: “2014 is going to be the year when cable operators realize they are in the broadband business. With content prices and retrans costs continuing to escalate at the same time, free or very cheap subscription-based content (e.g. Netflix) will become better and more ubiquitous. More and more operators are going to realize the long-run competitive differentiator is the size of their pipe.”

Jonathan Friesel

Title: Partner, Oak Hill Capital Partners

Background: Friesel is a partner of Oak Hill Capital Partners in the Media and Communications group and is a member of the Investment Committee. He joined the firm in 1998. Prior to Oak Hill Capital, Friesel worked at Lehman Brothers in its Telecom and Media group. He earned a bachelor’s degree from Cornell University.

Notable Cable Deals: Friesel has been integrally involved in Oak Hill Capital’s successful realized investments in WideOpenWest Holdings and Atlantic Broadband Group, as well as the firm’s current investment in WaveDivision Holdings.

Outlook for 2014: “We expect that the M&A market will be active for the cable industry in 2014. Specifically, demand will be driven by strategic acquirors who are looking to further increase scale and financial buyers who are attracted to the broadband technological platform and attractive recurring revenue streams.”

David (“Digger”) Granville-Smith

Title: Managing Director, Head of Media Investment Banking, J.P. Morgan Securities

Background: Granville-Smith has worked at J.P. Morgan and its predecessor companies for 23 years. He joined J.P. Morgan in 2008 when the firm acquired Bear Stearns, where he worked in the Investment Banking Division for 17 years. Prior to that, he worked at Smith Barney in the Mergers & Acquisitions Group. He received an A.B. degree from Brown University.

Notable Cable Deals: Over the past several years, Granville-Smith has advised clients on a number of strategic transactions in the cable industry, including Cablevision’s sale of Optimum West, the spinoff of AMC Networks from Cablevision, the spinoff of Madison Square Garden from Cablevision, the buyout of Mediacom by its CEO, the spinoff of Liberty Media’s controlling stake in DirecTV, Liberty Media’s acquisition of a 38% stake in DirecTV, Time Warner Cable’s joint acquisition with Comcast of Adelphia and Time Warner Cable’s restructuring of Time Warner Entertainment. He has also advised several clients on raising a signifi cant amount of debt and equity capital.

Outlook for 2014: “As technology continues to evolve and significantly impact content consumption and distribution, the importance of brand and direct consumer relationships will be a major factor in the battle for subscribers and advertisers.”

Erik Levy

Title: Senior Principal, Direct Private Equity, CPPIB

Background: Levy is a founding member of CPPIB’s Direct Private Equity team, where he has led or co-led various investments over the years. Prior to joining CPPIB, Erik worked with Bain & Co. and Mercer. He holds graduate degrees from the University of Toronto (MBA) and Concordia University (bachelor’s degree in actuarial mathematics).

Notable Cable Deals: Buyout of Suddenlink Communications

Outlook for 2014: “The cable infrastructure is increasingly playing a pivotal role in how we consume information and media. Given the added benefits of scale, we are no doubt in the beginning stages of another exciting chapter for the industry.”

Ketan Mehta

Title: Managing Director, Global Head of Technology, Media & Telecom M&A, Citigroup

Background: Mehta has advised on some of the landmark M&A transactions in the media industry and manages relationships with many of Citigroup’s TMT clients. He has more than 20 years of investment banking experience. He spent 12 years at Credit Suisse First Boston, prior to joining Citigroup in 2005.

Notable Deals: Time Warner Cable’s pending merger with Comcast; Discovery’s acquisition of SBS Nordics; the separation of News Corp. and 21st Century Fox; Time Warner Cable’s acquisition of Insight Communications; GE’s sale of NBCUniversal to Comcast; Time Warner Inc.’s spinoff of Time Warner Cable; Discovery’s acquisition of a $500 million stake held by Advance/ Newhouse; and Time Warner Inc.’s acquisition of Chilevision and investment in Central European Media Enterprises.

Jeffrey Meskin

Title: Partner, Brown Brothers Harriman & Co. and Co-Manager of BBH Capital Partners

Background: Meskin is a partner in Brown Brothers Harriman and co-manager of BBH’s private-equity strategy, BBH Capital Partners, which along with its predecessor 1818 Funds have been active investors in cable and telecommunications for the past 25 years. He joined BBH in 2000 and was named a general partner in 2011. He graduated from the University of Wisconsin with honors and received a JD from Fordham University School of Law.

Notable Cable Investments: Meskin was involved in sourcing, investment evaluation and transaction execution, and serves on the Board of Directors (or similar governing body) of several cable and related businesses, including recent investments Vyve Broadband and EdgeConneX. Other past communications investments include Xspedius LLC, which was sold to TW Telecom; Long Lines LLC; US Unwired, which was sold to Sprint; Tower Ventures; Telarix; and Noble Systems.

Malcolm Morris

Title: Managing Director and Vice Chairman at Deutsche Bank

Background: Morris has been with Deutsche Bank since 1992, having joined Alex. Brown & Sons in Baltimore in the Media Group. He has over 20 years of M&A and finance advisory experience. Morris has an MBA from INSEAD (Institut Européen d’Administration des Affaires) and a BScE (Bachelor of Science, Economics) from the Wharton School at the University of Pennsylvania.

Notable Cable Deals: Morris has served as sole adviser to Time Warner Cable on the acquisition of NaviSite for $304 million; co-adviser to Time Warner on separation of Time Warner Cable for $42 billion; and adviser to Time Warner Inc. on spinoff of AOL for $2.5 billion.

Raymond Svider

Title: Co-Chairman and Managing Partner at BC Partners

Background: Svider joined BC Partners in 1992 and is currently based in New York. Prior to joining the firm, he worked in investment banking at Wasserstein Perella in New York and Paris and at the Boston Consulting Group in Chicago. Svider holds a MBA from the University of Chicago and a MS in Engineering from both École Polytechnique and École Nationale Supérieure des Télécommunications in France.

Notable Cable Deals: BC Partners jointly acquired Cequel/Suddenlink Communications with CPPIB and Suddenlink chairman and CEO Jerry Kent and his management team in 2012 for $6.6 billion. BC Partners also helped create Unitymedia through several mergers between 2003 and 2005, and sold it to Liberty Global in November 2009 for $4.7 billion. Svider also led BC’s investment in France in Neuf Telecom (an alternative telecom operator) in 2000, which was listed on the Paris exchange and subsequently acquired by Cegetel, a subsidiary of Vivendi, in 2007.

Outlook on 2014: “I continue to be bullish on the outlook for the cable industry. Internet and commercial services continue to drive growth across the industry, while an improved video offering and aggressive bundling strategies contribute to limit the decrease in the video product, which can be expected to flatten and potentially eventually start growing again for the most successful operators. Suddenlink is at the forefront of such strategies, and benefits from a well-invested network and superior service offering to its customers versus the telecom and satellite operators across its footprint.”

 

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April