Storer Expresses ‘Interest’ in Wometco Cable Merger

Storer Communications, the nation’s fourth-largest cable-TV system operator, said Friday that it has “expressed an interest” in acquiring Wometco Cable Television but has made no formal offer.

Both Storer and Wometco are headquartered in Miami, and both are controlled by Kohlberg Kravis Roberts & Co., a New York investment firm that led buyouts of the two companies in 1985 and 1984, respectively.

Wometco, the nation’s 27th-largest cable-TV system operator, serves about 348,300 subscribers. At current industry prices of nearly $1,400 per subscriber, the company could fetch at least $488 million.

But Storer spokesman Andy Holgate cautioned Friday that his company has “not made an offer, and obviously there has not been an agreement.”

If the cable companies are merged, the surviving company will presumably be easier to operate, sell outright or take public again, analysts said. The combined cable operations would boast about 1.9 million subscribers and a market value of nearly $2.7 billion.

Whatever its decision, Kohlberg Kravis is poised to reap significant profits, according to analyst Paul Kagan, who publishes a number of industry newsletters. By Kagan’s estimate, Kohlberg Kravis-led investors paid a total of $3.5 billion for Storer and Wometco, and they already have negotiated sales worth nearly $2.4 billion for other assets of the two companies, primarily TV stations.

If cable-TV values continue to climb as Kagan predicts--to as much as $1,750 per subscriber in two years’ time--a combined Storer-Wometco cable company might sell for $3.5 billion by 1988.