Comcast Corp. said Sunday that it agreed to buy the cable television operations of Maclean Hunter Ltd. for $1.27 billion, giving further evidence of the ongoing consolidation sweeping the cable TV industry.
If the deal wins regulatory approval, it will make Comcast the nation's third-largest cable television company, with 3.5 million subscribers--550,000 of them from the Maclean acquisition.
Comcast's cash purchase, from Maclean parent Rogers Communications Inc. of Toronto, comes about two weeks after Times Mirror Co. agreed to spin off its cable TV unit into a new venture with Cox Enterprises Inc. for $2.3 billion. The Cox venture is expected to have more than 3 million subscribers when the acquisition is completed.
The cable industry has been consolidating to achieve the size and regional concentration necessary to invest in services it anticipates having to provide in the future to compete with telephone companies, which will increasingly be able to deliver entertainment.
Maclean Hunter's cable and related operations include services in New Jersey, Michigan and Florida. Comcast serves customers in 15 states.
Maclean Hunter, a diversified media company also based in Toronto, is being bought for $2.2 billion by Rogers Communications, Canada's largest cable operator.
Rogers has said it would sell Maclean's U.S. cable operations to pay down debt it took on to help buy Maclean, which controls Toronto Sun Publishing Corp., publisher of the Financial Post and Sun newspapers in Toronto, Ottawa, Edmonton and Calgary.
The sale to Comcast is subject to certain governmental and other approvals, as well as to Canadian regulatory approval for Rogers' acquisition of Maclean Hunter.
"We are very pleased to have the opportunity to expand our cable operations through this significant transaction with RCI," Comcast President Brian L. Roberts said in a statement.
"For some time, we have considered Maclean Hunter's systems to be a logical strategic extension of Comcast's cable business," Roberts said. "These properties are a great fit with our existing clusters in northern New Jersey, Florida and Michigan. The acquisition allows us to increase our presence in three of the top 15 television markets."
Graham W. Savage, chief financial officer for Rogers Communications, and John Alchin, senior vice president for Comcast, did not return repeated telephone calls seeking comment on their announcement.
In addition to its cable operations, Philadelphia-based Comcast provides cellular telephone services to more than 7.4 million people in the Northeast. It has invested in cable programming, telecommunication systems and international cable systems.
Rogers Communications has interests in cellular telephone services and other wireless communications networks.
In September, Comcast and Liberty Media Corp. backed QVC Network Inc. of West Chester, Pa., with a $1-billion investment in QVC's attempt to buy Paramount. QVC in February lost the bid for Paramount to Viacom Inc.
Also in February, Comcast agreed to help in the local marketing of MCI Communications Corp.'s venture into the wireless communications business. The venture is trying to create a network to allow customers to use the same cellular telephone and phone number anywhere nationwide.
Earlier this month, eight states, including Pennsylvania, sued Comcast, saying the company used illegal billing practices. Pennsylvania and the other states--Arkansas, California, Connecticut, Florida, Illinois, Kentucky and Mississippi--said Comcast subsidiaries tricked their customers into paying for services not approved.
All eight states are seeking refunds and, in some cases, civil penalties. Comcast has denied any wrongdoing and has asked a Florida court to declare its actions legal. Delaware, Indiana, Maryland and Michigan have also begun investigations.
Top Cable Operators
Comcast Corp.'s plan to acquire the U.S. cable television systems of Maclean Hunter Ltd. will create the third-largest U.S. cable operator, measured by number of subscribers. Here's how the biggest players rank, assuming all pending acquisitions go through:
Company Subscribers (in millions) Tele-Communications 10.7 Time Warner Cable 7.2 Comcast Cable 3.5 Cox Cable 3.0 Continental Cablevision 2.9
Source: Cablevision Magazine