European telecommunications and cable group Altice has agreed to purchase Cablevision, the fifth-largest cable operator in the U.S. and owner of New York’s Newsday newspaper for $17.7 billion, including debt. The deal is the latest in a series of moves that are re-shaping the U.S. broadband and cable television market.
Altice announced the deal Thursday morning and Cablevision, which is controlled by the Dolan family, said that the time is right for new ownership of Cablevision.
Netherlands-based Altice founder Patrick Drahi built a telecoms and cable empire in recent years through debt-fueled acquisitions in France, Portugal and Israel. Last year, the company acquired France's No. 2 mobile phone operator, SFR for $18.5 billion. Beginning this year, Altice purchased Portugal Telecom for $8.4 billion. It also has operations in Belgium, Switzerland and elsewhere.
The move is part of the Altice’s aggressive expansion in the U.S. In May, it announced a $9.1 billion deal for Suddenlink; a small regional cable group based in St. Louis and had openly announced further expansion there.
Shares of Cablevision Systems Corp. surged 16 percent to $33.12 in after-hours trading Wednesday.
According to Altice, the deal will be funded with $14.5 billion of debt at Cablevision plus cash from both companies. The company said it hopes to complete the deal in the first half of 2016, though it remains subject to regulatory approval.
The U.S. cable industry has been in merger frenzy over the past few years as consumers increasingly ditch their TV packages and watch video online from competitors like Netflix, while cable companies' costs for sports and other channels increase.
In May, Charter Communications, backed by cable pioneer John Malone, agreed to buy Time Warner Cable and Bright House for $67.1 billion. That comes after regulators had opposed a tie-up between Comcast and Time Warner. Recently, AT&T closed on a $48.5 billion purchase of satellite TV company DirecTV, bringing one of the nation's largest wireless carriers together with the largest satellite TV provider.
Altice will now fall heir to 2.78 million broadband customers and 2.64 million pay-TV customers in New York City's Long Island suburbs and other parts of the New York metro area. The company will also inherit Newsday, a 400,000-circulation Long Island newspaper, and the seven regional Channel 12 cable news networks, according to reports.
Altice's CEO Dexter Goei has said that the company is aiming for half of its portfolio to be U.S. business.