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Wide Open West Will Be Wide Open to Merger/Takeover After Launching IPO

Phillip Dampier March 27, 2017 Competition, Consumer News, Editorial & Site News, WOW! 3 Comments

One of America’s handful of cable overbuilders that provide competing cable television service will be ripe for an acquisition or merger after launching an initial public offering that could raise as much as $750 million and make them a juicy target for a takeover.

WideOpenWest, which customers know better as WOW!, provides almost a half-million customers in Alabama, Florida, Georgia, Illinois, Indiana, Maryland, Michigan, Ohio, South Carolina and Tennessee with a choice of a second cable company. It has consistently won reasonably high scores in ratings issued by Consumer Reports and often offers better speed and service than incumbent providers. WOW has been quietly and slowly expanding service, but in the last two years has attracted the interest of private equity firms and Wall Street banks. One of those equity firms — Crestview Partners, invested $125 million in WOW 18 months ago. UBS Investment Bank and Credit Suisse have teamed up to manage the IPO.

Jeff Marcus, who also happens to be a partner in Crestview, has been named chairman of WOW. Avista Capital Partners still owns almost 60% of the company.

By entering the public market, WOW could quickly come under pressure from Wall Street analysts to get out of the cable business by selling the company and profiting investors. The drumbeat for mergers and acquisitions has only intensified with a corporate-friendly Trump Administration that has sought to appoint “hands-off” regulators at the FCC and Justice Department. There are several likely buyers — the various cable companies that face direct competition from WOW and would like shut the company down and upstarts like Altice, which has targeted smaller cable operators like Cablevision and Suddenlink.

Marcus has telegraphed he is isn’t in a hurry to spend investors’ money, which could leave WOW flush with cash, something else attractive in a takeover. Multichannel News reports that one of WOW’s “main directives” would be to offer “video, voice, and data services in packages that consumers want,” — hardly a revolutionary concept. In a July interview, Marcus made it clear there was ‘no burning need to increase scale.’ That tells would-be buyers the company hasn’t any immediate plans to spend a lot of money or expand service, things that could drive away some buyers.

“It’s all opportunistic,” Marcus said. “When I started Marcus Cable with 18,000 subscribers, I had no idea that it would get to 1.3 million. One thing led to another and we took advantage of opportunities as they presented themselves. I think that’s what is going to happen here.“

A wealth opportunity for Marcus would be collecting significant proceeds selling the operation. There is a good chance WOW will either buy other companies or be bought itself as the cable industry consolidation wave continues. Other operators about its size — Cable ONE and until recently NewWave Communications, have been considered takeover targets for years. NewWave was acquired by CableONE in January for $735 million in cash, coincidentally slightly less than the potential upper limit of WOW’s proceeds from an IPO.

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Ty
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Ty

No! not WOW! I left Time Warner Cable for WOW! after Charter took over and wouldn’t give a more reasonable price for service! WOW! has been so much better and I have only good things to say about them! I am afraid if WOW! were to be purchased by someone else that might change! However, I don’t really see how WOW! could be shut down I do fear service quality could suffer! Hopefully WOW! is the one doing the buying and they continue with their more consumer focused approach.

Ron Burgundy
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Ron Burgundy

Yeah, this would be unacceptable. I have WOW and enjoy its fast speeds and reasonable prices. I left AT&T (which was awful) and haven’t had issues since.

Lord Jim
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Lord Jim

As a happy Wow! customer I, too, would be dismayed if an AT&T or a Comcast took over my favorite ISP. Nevertheless, I have to admit that in these corporatist times, it is a very likely possibility. In previous eras where antitrust laws were actually enforced this would be less of a threat, but all I can say is: enjoy Wow! while you still can.

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