Comcast to Buy Out CalPERS’ Stake in Cable TV Firm

Comcast Corp. on Thursday said it agreed to buy the 45% of its cable television partnership with the California Public Employees’ Retirement System it doesn’t already own for $750 million.

The third-largest U.S. cable TV provider will gain complete control over Comcast MHCP Holdings, which has about 642,000 subscribers to systems in Michigan, New Jersey and Florida.

Cable companies are building larger regional subscriber groups, or clusters, to cut costs and offer new digital services. Philadelphia-based Comcast said Wednesday that it will also buy the 61% in Jones Intercable Inc. it doesn’t already own for $4.89 billion in stock and debt.

“Comcast is trying to roll up its interests so it can have more control over systems and do [cable] swaps if it needs to,” said Michael Kupinski, an analyst at A.G. Edwards & Sons, who has a “maintain” rating on Comcast stock.

With the sale, CalPERS, the largest U.S. pension fund with about $160 billion under management, will reap three times the value of its initial investment.

Comcast MHCP was formed in December 1994 by CalPERS and Comcast to buy the domestic cable assets of Maclean Hunter Ltd. Comcast has managed the partnership since that time.

CalPERS provides retirement and health benefits to more than 1 million current and retired public employees and their families.

Comcast’s Class A shares rose $4.19 to close at $53.12 on Nasdaq. The stock is up 85% this year.

The purchase, which Comcast said it expects to complete early next year, marks the company’s last partnership in which it owns a partial interest.

The venture’s $750 million of debt is already on Comcast’s balance sheet. The price values the partnership at about $2.4 billion, or about $3,800 per subscriber, analysts said. That’s less than some recent cable acquisitions, which have been valued as high as $5,000 per subscriber.

When the partnership was formed, the cable TV business was out of favor with some investors as companies struggled to obtain financing for acquisitions, analysts said.

About 40% of the partnership’s subscribers are in Union, N.J., the 21st-biggest U.S. cable market. The bulk of Comcast’s customers are in the mid-Atlantic area. After pending acquisitions and swaps, more than half of the company’s 8.2 million customers will be in that region.