Major Cable Firms Revive Merger Talks
United Cable Television and United Artists Communications, two major cable TV companies that abandoned a merger proposal last October in the wake of the stock market crash, announced Thursday that they have begun discussing a merger on different, undisclosed terms.
Senior executives at the two Denver-based companies were unavailable for comment, but the announcement was greeted as fresh evidence of the cable industry’s resilience.
“This is a business that came back remarkably fast,” said John Tinker, a securities analyst at the investment firm of Morgan Stanley & Co. “Three months after the crash, and it’s business as usual.”
Less than three weeks ago, a group of cable companies agreed to buy SCI Holdings, formerly Storer Cable, for about $1.7 billion. The sellers had initially sought $2 billion, but negotiations collapsed several weeks before Black Monday, the day the Dow Jones index fell 508 points.
And in a separate development Thursday, a Los Angeles cable executive said a partnership managed by his company, Falcon Cable TV, is pressing ahead with the purchase of 12 cable TV systems for slightly more than $100 million.
Marc B. Nathanson, Falcon’s president and chief executive, said the partnership has been undeterred by the stock market plunge and expects to close on the new purchases within the week. “We do not think there’s been a price adjustment in the private market, and we don’t think there should be,” Nathanson said.
“There has been no price adjustment, period,” said Gordon Crawford, senior vice president at Capital Guardian Research Co., a unit of Capital Group, one of the largest institutional investors in United Cable and United Artists Communications.
In the merger plan announced Oct. 16, United Artists Communications and United Cable proposed to exchange shares in a deal valued roughly at $2 billion. The merger would have consolidated the holdings of Tele-Communications, the nation’s largest cable TV operator, which owns 65% of United Artists and 23.4% of United Cable.
But the plan drew a storm of protest because some shareholders contended that United Cable might have found a different bidder willing to pay some cash. United Cable has been a popular cable TV investment precisely because cable is its sole business, and the company has just one class of stock.
On Oct. 20, one day after the market crash, the two cable companies suspended the plan because of “extraordinary” market conditions and--in the words of United Cable Chairman Gene W. Schneider--"unresolved substantive terms of the merger agreement.”