Saturday, May 24, 2008

Comcast trying to sell 46 outlying cable systems

PHILADELPHIA (AP) — Comcast Corp. is trying to sell 46 smaller cable systems serving 400,000 to 500,000 subscribers as it seeks to improve efficiency by shedding disparate operations.

"It's not about money at all," said Robert Serrano, an analyst at SNL Kagan in Monterey, Calif. "They are pruning some of the more outlying areas in order to make a more efficient cluster."

Serrano said Comcast, the nation's largest cable TV operator, could get $3,000 to $4,500 per subscriber, although sale prices would vary by asset.

Most of the cable systems are in eight states — Maine, Kentucky, Louisiana, New Mexico, Virginia, Georgia, West Virginia and California, and almost one-fourth of them are in rural central and northern Maine.

The Times Record in Brunswick, Maine, was the first to report that Comcast was selling 46 systems.

John Goran, chairman of the cable TV regulatory board in Freeport, Maine, said Comcast told him about its plans a week ago. Comcast serves 14 towns in Maine and is looking to get out of 11.

In Maine, the most logical buyer for Comcast subsidiaries is Time Warner Cable Inc., which serves 85 percent of Maine, including areas surrounding the 11 municipalities Comcast hopes to bow out of, Goran said. A Time Warner spokesman declined to comment.

Comcast took over the Maine systems after it acquired York, Maine-based Susquehanna Communications in May 2006 for $540 million in cash. It already owned 30 percent of SusCom and valued the entire asset at $775 million.

When a cable system is concentrated geographically, it is cheaper to provide services, Serrano said. If the area also happens to be more affluent, the company gets the added benefit of higher revenue per household.

After selling the nearly four dozen systems, Comcast might buy other cable systems closer to where it already has a substantial presence, said Bruce Leichtman, president of the Leichtman Research Group in Durham, N.H.

Goran hopes his new cable operator will be able to offer digital voice services, something his Freeport home doesn't get from Comcast even though it's close to downtown.

"We don't have Internet phone, no video on demand or any of those advanced services," he said. "We have standard cable and high-definition and premium channels and that's it."

Shares of Comcast fell 58 cents, or 2.6 percent, to $21.62 Friday.

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