America has a new second largest cable conglomerate with 17 million customers and a new name.

Charter Communications formally completed their $55 billion acquisition of Time Warner Cable and Bright House Networks today, creating a new cable giant that more closely rivals number one Comcast in size and scope.

The approval came despite warnings from a team at the FCC assigned to review the impact of the merger.

The Deal is Likely to Trigger an Abusive Money Party at the Expense of Customers… Merger Approved

“We conclude that the transaction will materially alter [Charter’s] incentives and abilities in ways that are potentially harmful to the public interest,” an FCC report about the impact of the merger states.

The FCC concluded the deal could become an enormous money-maker for Charter and its investors through the eventual metering of online usage. There are strong incentives, according to the FCC, for Charter “to impose data caps and usage-based prices in order to make watching online video more expensive, and in particular more expensive than subscribing to a traditional pay-TV bundle” after its voluntary commitment not to impose data caps expires.

The FCC is also certain Charter will enjoy considerable pricing power with its near broadband monopoly at speeds of 25Mbps or higher. That means one thing: substantial rate increases unchecked by competition.

Despite the gloomy prospects, FCC commissioners found a “compromise” that will impose consumer-friendly conditions on the merger, but will expire between 5-7 years from today. After that, in the absence of robust competition from a player like Google Fiber, it will be open season on broadband customers.

Consumer advocates were less than pleased.

“There’s nothing about this massive merger that serves the public interest. There’s nothing about it that helps make the market for cable TV and Internet services more affordable and competitive for Americans,” said Free Press president and CEO Craig Aaron. “Customers of the newly merged entity will be socked with higher prices as Charter attempts to pay off the nearly $27 billion debt load it took on to finance this deal. The wasted expense of this merger is staggering. For the money Charter spent to make this happen it could have built new competitive broadband options for tens of millions of people. Now these billions of dollars will do little more than line the pockets of Time Warner Cable’s shareholders and executives. CEO Rob Marcus will walk away with a $100 million golden parachute.”

In fact, the golden parachutes will extend far beyond retiring Time Warner Cable CEO Rob Marcus. According to a regulatory filing, Marcus’ contract was written to allow him to sell the company and effectively be “terminated without cause,” which activates the equivalent of a Powerball Powerplay. Marcus will automatically qualify to receive several years’ worth of his original salary, expected bonuses, and compensation in stock for showing himself to the exit. That alone is expected to exceed $100 million. Marcus’ ancillary benefits also add up, and will be eventually disclosed in future filings with the Securities & Exchange Commission.

Marcus’ colleagues won’t leave empty-handed either. The chief operating officer and chief financial officer of Time Warner Cable could each get $32 million in compensation. The general counsel of Time Warner will retire with around $22 million and some mid-level executives could leave with around $18 million each.

Familar names on Wall Street will also enjoy proceeds worthy of Donald Trump Lotto. Everyone’s favorite financial casino Goldman Sachs is sitting pretty with millions in fees advising Charter on both its acquisitions of Bright House and Time Warner Cable. UBS helped lead the financing of the whopping $55 billion deal on behalf of Charter and is the sole financial adviser to Advance/Newhouse, which owns Bright House. That means big bucks for the Swiss bank.

The Small Swallow the Big

Charter was a much smaller, and not well-regarded cable company before it financed the acquisition of two of its non-competing rivals. In fact, Time Warner Cable was already the country’s second largest cable operator before the acquisition, and Charter will have to contend with managing a cable operator much larger than itself. Charter executives have hinted it will take many months to manage that transition, with the eventual retirement of both the Time Warner Cable and Bright House brands, in favor of Charter and its Spectrum product suite.

Those not already Charter customers will be subjected to a publicity campaign to manage the introduction of Charter in the best possible light, despite the fact current Charter customers rate the cable operator as mediocre in consumer surveys. Its reputation is well-known, especially in the middle of the country where many Charter systems operate.

Charter will continue to be led by CEO Thomas Rutledge, who will also hold the titles of president and chairman of the board. But the man behind-the-scenes expected to have a substantial amount of influence in how Charter is run in the future is ex-Tele-Communications, Inc. (TCI) CEO Dr. John Malone through his entity Liberty Broadband, which will control three seats on Charter’s board of directors, including one for Malone himself. Malone advocated for Rutledge to become CEO of Charter after the cable company emerged from bankruptcy reorganization in 2009.

How to Remake Your Image: Change the Name

Renaming Time Warner Cable isn’t likely to fix the scandalously low regard its customers hold the company. But it couldn’t hurt either.

“It’s not surprising Charter wants to rebrand Time Warner Cable,” said David VanAmburg, managing director of the American Customer Satisfaction Index, which regularly rates Time Warner Cable (and often Comcast trading places) the worst companies in the country. “Charter has scored better than Time Warner Cable in recent years, so it could bode well for Time Warner Cable customers. But the data suggests leaps-and-bounds improvement could be difficult.”

ACSI graded Charter 57 in 2015. Time Warner Cable managed a 58 — both effectively failing grades on a scale of 0-100.

What kinds of services Charter is now compelled to offer is dependent on the state of the cable system serving each area and if regulators extracted concessions on the state level to guarantee better service. The state that worked the hardest to compel upgrades and insist on a more customer-friendly transition is New York, where the Public Service Commission forced concessions to upgrade all of the state and allow customers to keep their current Time Warner Cable plans if they wished.

“On Day One, customers of (Time Warner) won’t really see any changes,” Charter spokesman Justin Venech told the Albany Times Union. “Time Warner Cable and Charter Spectrum will continue offering their current suite of advanced products and services to customers in their markets.”

“As we go all digital market by market, we will launch the Spectrum brand product, pricing and packaging, and Charter will also launch Spectrum in those markets in which (Time Warner has) already gone all digital,” Venech said. “We will be communicating directly with customers, letting them know when they will start seeing the Spectrum brand. In addition, when our Spectrum packages launch, if a customer likes the package they are currently in, they will be able to stay in that package.”

Any final approval of Charter Communication’s planned acquisition of Time Warner Cable and Bright House Networks will likely not come before next summer, as regulators in California decide to take a closer look at the blockbuster merger deal that would make Charter the second largest cable company in the country.

An administrative law judge is contemplating the merger’s impact on California, and a decision is unlikely to come before May 2016, with a final vote of the California Public Utilities Commission tentatively scheduled for June 16th. The judge agreed with consumer groups that the deal warrants evidentiary hearings — a sign the deal deserves additional scrutiny.

New York State’s Public Service Commission is also still reviewing the transaction, although it is expected to render a decision within the next few months. On the federal level, the FCC has also not held back, recently requesting answers to a number of questions regarding John Malone’s involvement in the future of “New Charter.” Malone remains Charter’s biggest single shareholder and could wield considerable control over New Charter’s operations. Considering Malone’s long history of antagonizing customers and engaging in what lawmakers called anti-competitive behavior during his realm at Tele-Communications, Inc. (TCI), regulators may not want to see history repeat itself.

What was originally anticipated by industry observers to be an ‘easy approval,’ is now looking more like Comcast’s failed bid for Time Warner Cable, as regulators seem to be in no hurry to give Charter’s deal a green light.

If regulators do ultimately approve the deal, it is likely to come with a number of conditions designed to at least temporarily protect consumers and competitors. Stop the Cap! argued in filings with state and federal regulators Charter’s proposal was uncompelling and consumers were unlikely to benefit from the deal. Time Warner Cable’s ongoing Maxx upgrade program delivers faster Internet speeds and better service than Charter’s more modest proposal offering upgrades up to 100Mbps. Time Warner Cable Maxx offers customers up to 300Mbps broadband for the price the company now charges for 50Mbps.

The cable magnate Sen. Albert Gore, Jr., (D-Tenn.) once called the Darth Vader of the cable industry is under enhanced scrutiny by federal regulators reviewing the Charter Communications-Time Warner Cable merger deal.

Dr. John Malone holds a 26 percent ownership in Charter, making him the largest shareholder by far, seconded by Warren Buffett, who holds less than an eight percent stake in the cable operator.

Many cable subscribers over 40 have done business before with a Malone-held cable firm, most likely Tele-Communications, Inc. (TCI), which operated from the 1970s until Malone sold it to AT&T in 1999 for close to $60 billion. In turn, AT&T sold the majority of its cable holdings to Comcast just a few years later.

Malone’s reputation for hiking rates and controlling the programming running on his cable systems is legendary. At one point, TCI held an ownership interest in most major cable networks carried on its cable systems. Cable networks that failed to secure carriage agreements with TCI were at a substantial disadvantage because TCI at its height was the nation’s largest cable provider.

Since Malone sold TCI, the multi-billionaire has built a significant cable empire in Europe and is today the largest private landowner in the United States. In the U.S., he is best known as the current owner of SiriusXM satellite radio. The two satellite companies merged with an agreement not to raise rates for a few years. As soon as that agreement expired, Malone’s combined Sirius/XM operation began a series of rate hikes and maintain a satellite radio monopoly in the U.S.

Malone’s other media interests include ownership stakes in Viacom Inc., Time Warner (Entertainment) Inc., concert-promoter Live Nation Entertainment Inc., and bookseller Barnes & Noble Inc. He also maintains significant ownership interests in Discovery Networks and Starz. Many of these companies negotiate directly with Charter and its competitors.

With ownership stakes in important programming, Malone could influence the sale of programming on more favorable terms to Charter with discounts unavailable to other cable companies and competitors including AT&T, Verizon, and satellite TV providers.

The FCC is particularly concerned whether Malone can exert influence over programmers that could result in anticompetitive activity, particularly in the emerging world of online video competition. In a lengthy 20-page questionnaire, the FCC wants specifics about Malone’s involvement in Charter, all the way down to requesting copies of board meeting minutes:

Describe in detail John Malone’s ownership, control (whether de jure, de facto or negative), or management of Charter, Time Warner Cable, DIRECTV, Liberty Media, Liberty Broadband, Liberty Interactive, Liberty Cablevision of Puerto Rico, Liberty Global, Liberty Ventures Group, Discovery Communications, Starz, New Charter and any other MVPDs and programmers not listed herein for which he owns an interest. For each entity in which John Malone manages, controls, or has an ownership interest, please describe: (1) the nature and extent of the ownership interest and all board representation, management rights, voting rights, veto rights, or veto power; and (ii) all effects that the proposed Transaction, if consummated, would have on the interests described in response to (i).

After 44 years in the cable television business, the Dolan family has agreed to part with its prize possession, Cablevision Systems Corp. in a $17.7 billion dollar deal with Patrick “The Slasher” Drahi’s Altice NV.

The transaction will profoundly impact Cablevision’s employees, customers, and potentially the cable business in general in the New York City metropolitan area, where Cablevision’s 3.1. million customers live.

Who is Patrick Drahi?

Although few Americans have heard of the self-made billionaire Patrick Drahi, most of French-speaking Europe knows Mr. Drahi only too well, regularly criticized in the French press for surrounding himself with debt-laden acquisitions, stiffing vendors and suppliers, and paying rock-bottom wages to the employees that remain after constant campaigns of ruthless cost cutting.

Drahi’s idol is none other than cable magnate billionaire John Malone, the man pulling the strings at Charter Communications. In the 1970s and 1980s, Malone ran America’s largest cable conglomerate – Tele-Communications, Inc. (TCI), a company castigated by customers for high rates and poor service about as much as Comcast is today.

Malone’s reputation with the U.S. Congress reached its lowest point in the 1980s when then-Sen. Al Gore, Jr. (D-Tenn.) alternately accused Malone of heading a monopolistic cable “Cosa Nostra” that extorted his constituents with rate increases that exceeded 180% in less than five years and the “Darth Vader of Cable.” Malone taught Drahi that massive sums of money could be made buying and selling cable television (and later broadband) over systems that are usually de facto monopolies. Although entertainment is always in high demand, few governments treat the cable systems that offer it as an “essential utility,” allowing them to charge whatever they want for service.

From his earliest days working for a small cable operator, Drahi dreamed of building a cable empire buying and selling cable systems, extracting whatever he could from subscribers. One of his earliest techniques was flouting a French telecommunications law that, at the time, forbade the carriage of non-French language channels. His cable systems quietly added Arabic language networks to entice the large North African immigrant community in France to sign up for service. Drahi did not directly promote the networks, relying on word-of-mouth to deliver sales in the Arabic speaking community.

The Sacred Monster

While very conservative about spending money on wages, service upgrades, and technology, customers of Drahi-owned cable companies report he had no problem raising their rates. Numericable’s customer satisfaction rating rivals that of Comcast — a one-star cable company charging five-star prices.

The announced acquisition of Cablevision (and earlier Suddenlink) by Drahi’s company — Altice NV, came with glowing coverage from the American media, particularly cable business news channels, the Wall Street press, and the New York Times. A Sept. 7, 2015 piece by Nicola Clark in the Times presented Drahi as a classic “rags to riches” success story, noting he loathes being interviewed and allegedly leads a humble existence:

Despite a personal fortune estimated at close to €17 billion, Mr. Drahi indulges in few of the trappings of great wealth, friends and colleagues said. Although he keeps several elegant homes — in Geneva, Paris and Tel Aviv — his personal tastes and habits hew to the mundane. He wears a plastic Swatch instead of a Rolex and often arrives at business meetings on foot or a bicycle, instead of by chauffeured car.

Clark only mentions in passing she relied almost entirely on a series of interviews with “a half-dozen friends and colleagues” to paint what turned out to be a one-sided picture of Mr. Drahi for American readers. That story had eyes rolling among staffers in the offices of French newspaper Les Echos, incredulous at the American infatuation with a man the newspaper calls the “sacré monstre” — sacred monster. In New York, reporter Lucie Robequain, foreign business correspondent for the French daily, tried to share the scene at the Goldman Sachs-organized Communacopia conference where the deal was personally announced by Mr. Drahi for her French readers.

“Newspapers [in America] devote entire pages [about Drahi], emphasizing his self-made-man side which Americans love so much,” Robequain noted. She added the New York Times painted Drahi an almost romantic figure, proposing to his wife one hour after meeting her and then putting everything between them at risk to build his personal fortune.

A later piece in the Times on Sept. 17 by Emily Steel and Mark Scott also was the subject of derision in the European press. Steel and Scott called Altice a “bold new player” in the American cable market and gave Dexter Goei, one of Drahi’s lieutenants (some in the French press prefer ‘minion’) space to gush about the game-changing deal. Goei joined Altice in 2009, having worked for 15 years in investment banking with JP Morgan and Morgan Stanley until the Great Recession arrived.

“There’s a new sheriff in town, and we’re probably going to run it a little differently,” Goei said during the investor conference in New York on Thursday that unveiled the deal.

Phantom Fiber

The Times piece also relied on unnamed “analysts” dangling the promise of fiber optics to appease subscribers concerned about a legendary cost-cutter taking the helm of the cable company.

[…] Analysts said Altice invests heavily in new infrastructure — with a focus on upgrading fixed-line networks with the latest fiber-optic technology. The priority, analysts said, is to provide subscribers with faster Internet connection speeds at competitive prices.

In Europe, the press is skeptical about promised upgrades, noting Altice is “an empire built on a mountain of debt” largely made possible by quantitative easing and record low interest rates, which permit companies to finance buyouts on the cheap. Drahi says he can save money through synergy — sharing operations and minimizing the need for customers to reach out for customer service. Altice officials claim just by simplifying Cablevision’s bills, the company can save $14 million annually.

Drahi’s success story with Wall Street and other investors comes from his ability to cut costs at acquired companies, often dramatically. It is part of the informal deal with investors that has allowed the company generous credit to continue its buying spree. The Cablevision deal promises the Dolans and other investors only $3.3 billion in cash. The rest of the purchase price will come from raising $8.6 billion in new debt, saddled on Cablevision’s books inside Altice.

So while unnamed analysts are promising fiber upgrades for Cablevision customers, the Financial Times and CNBC report only one thing will be on Cablevision’s menu post-merger: spending a lot less, not more. Drahi seems to agree.

In a slide presentation to investors, Altice compares Cablevision’s $49 a month in operating expenses per customer against what its Numericable operation in France spends on its customers: $14 a month.

So how does Numericable spend three times less on subscribers than Cablevision?

Cost Cutting Specialists

Say hello to Michel Combes, former CEO of Alcatel-Lucent. Two years ago, he took leadership of the company that was better known by many as Bell Labs. Known as a cost-cutter, Combes quickly announced plans to strip the company of less profitable business units and fired about 10,000 workers while also holding the line on salaries (except for his) of the remaining employees. After two years in the leadership position, Combes engineered the sale of the company to Nokia, putting himself out of a job. But he won’t be hurting. A breathtaking golden parachute package approved by his colleagues on Alcatel Lucent’s board caused a political furor in France.

Combes’ departure bonus was originally planned to amount to $15 million in stock after completing the company’s sale to Nokia, an amount Emmanuel Macron, France’s economic minister, called shocking and irresponsible. Under pressure, the board has since cut the payoff roughly in half. But according to L’Observateur, Drahi has offered his friend an even more lucrative “golden hello” — stock options awarded as a signing bonus worth up to $100 million. Combes’ first role will be to serve as Altice’s chief operating officer, presiding over new rounds of cost-cutting at the company’s various acquisitions. One item spared from review is Combes’ own compensation package. Those under him are not so lucky.

Wages and Jobs

“I do not like to pay salaries, I pay as little as I can,” Drahi told investors at the Goldman Sachs event last week. Drahi complained more than 300 employees at Cablevision were being paid more than $300,000 a year. “This we will change.“

In addition to a large number of expected layoffs at Cablevision, widespread salary reductions are also likely to be forthcoming. Drahi’s cable companies have some of the smallest compensation packages in the industry, except at the top executive level.

Cablevision’s already testy relationship with some of its union employees will likely grow much worse under Drahi’s leadership. But that battle may have to wait until another day. In February, the union ratified a two-year agreement with Cablevision. In Europe, Drahi’s reputation among public unions is so poor many of the opinions expressed by unionized workers cannot be printed in a family newspaper.

In Lisbon, Jorge Felix – a representative of the trade union organization of workers at PT (Portugal Telecom) warns U.S. unions should get everything from Altice and Mr. Drahi in writing.

“There are commitments made by Altice before our union and are written,” Felix said, adding that he was disturbed by Drahi’s attitude toward his middle class employees. Felix notes Drahi has already created tremendous controversy in Portugal by stonewalling payment of suppliers and vendors’ outstanding invoices until the company secures written agreements promising enormous discounts, often amounting to 30-40% off current prices. That, in turn, can cause layoffs and salary reductions at suppliers, enriching Altice but hurting just about everyone else.

Drahi: Looking to run faster than the music

France’s Economic Minister Macron seems to agree, lashing out at Drahi’s now familiar business model.

“Is it good for the economy? The answer is no,” he said. “Is it good for investment? The answer is no. Is it good for employment? The answer is no.”

Macron also expressed concern that Drahi’s telecom empire was growing too fast — and taking on too much debt too quickly.

“I have a big concern in terms of leverage on Drahi due to its size and its place in our economy,” he said. “That’s my responsibility to look at it. He is looking to run faster than the music.”

Macron and his staff are concerned many of Drahi’s top executives and advisers come from New York’s financial markets and investment banks who either left or were pushed out in the turmoil of the Great Recession. Macron worries Drahi could be constructing the world’s first “too big to fail” cable operator that could cost nearly 100,000 jobs and require a government bailout if things turn sour.

Promised Service Improvement & Upgrades

With each cable consolidation merger, companies routinely promise subscribers will benefit from improved service. As mentioned earlier, unnamed analysts predict Drahi could invest up to $30 billion to improve the cable companies he buys in the United States.

“Which Altice are they talking about,” asks Stop the Cap! reader François Ribaud. “Altice owns Numericable, the largest cable company in metropolitan France, and if they are spending money it certainly was not on us.”

Ribaud’s original cable company Noos was acquired by Numericable in a massive acquisition effort in the early 2000s which today leaves almost all of France served by a single cable operator — Numericable.

“Things stagnated after that because Patrick Drahi does not spend money unless he has to,” Ribaud said. “The set-top boxes are outdated, the broadband service is often oversold, and heaven help you if there are service problems. The North African call center customer service help is an example for Numericable of getting what you pay for. They are awful.”

Drahi’s competitors in the fixed line and wireless markets eventually forced his wallet open, requiring an investment in fiber optics to help it remain a player in one of Europe’s most contentious telecommunications price wars. Drahi’s company in France lost subscribers as its network suffered from a lack of needed upgrades to manage demand.

“Now that I live in New York, I can say it is completely different than in France,” Ribaud said. “There is certainly no price war here, so there is no need to spend more money. The only people spending money will be customers I assure you.”

The Creator of Home Box Office Signs Off

Cablevision has been rumored “for sale” for so long without a deal, many analysts predicted the founding family would never let go of the company founded by 88-year old Charles Dolan, who helped transform what used to be a rural service to help customers receive distant over the air stations over a shared antenna into an urban and suburban subscription television business. Dolan made cable television something more.

Dolan founded Home Box Office (HBO), a commercial-free premium movie and entertainment channel free from the network “standards and practices” divisions that removed profanity and edited out violence from movies originally shown intact in theaters.

Cablevision systems used to cover 2.9 million subscribers in 19 states, many in small and medium-sized communities. By the 1990s, cable systems were swapped or sold to build regional empire-like service areas. Cablevision was no different, retreating to just three large service areas in New York, Cleveland and Boston. Soon thereafter, Cablevision would only serve metropolitan New York, particularly in Brooklyn, the Bronx, Long Island, parts of northern New Jersey and Connecticut, while exiting Cleveland and Boston.

The New York Post reported secret talks for the sale began in June, and a deal was complete at the end of August. Some of the discussions took place on a yacht floating around the Mediterranean. The Post reports the sale of Cablevision was an emotional experience for Dolan and he still thinks of the people who work there as family. But in the end, the Dolan family’s proceeds from the sale will reinforce their already well-established wealth and prominence. The same is unlikely to be true for Cablevision’s employees and customers under Drahi’s cost-conscious leadership.

After failing in a surprise bid to acquire Time Warner Cable out from under Charter Communications, European cable magnate Patrick Drahi has spent much of this summer quietly working to make sure that never happens again.

The French press is buzzing over Drahi’s decision to move his corporate headquarters from the business friendly Grand Duchy of Luxembourg — nestled between Belgium, France, and Germany — north to the Netherlands. The move is mostly on paper — attorneys drafted the agreement that effectively transferred Altice SA to Drahi’s Dutch subsidiary Altice NV and shareholders approved.

Why move the company from one of Europe’s most business-friendly countries to Holland, a country with a long history of corporate oversight? It wasn’t for the stroopwafels.

The Netherlands is rare among most European countries because it allows corporations to set up “dual-class share structures.” That means nothing to 99% of Dutch citizens and the majority of our readers, but it means a lot if you are a billionaire running a hungry multi-national corporation using other people’s money to gain control of companies on your acquisition list.

With the move, Drahi can embark on a breathtaking acquisition spree without diluting the control he has over his growing cable empire. Going forward, Altice will apply different voting rights to various classes of stock offered to investors. Drahi now holds 58.5% of Altice stock. But his shares are special because they grant him 92% of the voting power. Other shareholders will find they are not entitled to an equal say in how the public company is run.

Altice admitted to regulators they designed the new share structure to give Mr. Drahi greater flexibility for financing and corporate transactions without threatening his control of the company. Altice called that “a value-enhancing strategy without diluting voting control.” This means Drahi can offer generous amounts of Altice stock to help fund future takeover deals without worrying that will reduce his control over the company.

If Drahi were to recklessly launch a spending spree of epic proportions to the consternation of shareholders, there will be little recourse and almost no chance of a shareholder revolt. But just to make sure, Drahi gets to pick six of Altice’s eight board members. He also won an agreement with board members who also hold shares in Altice granting him absolute and automatic support of all his proposals for 30 years. On top of that, he is entitled to “negative control” over the board, which means in any vote, he is allowed to cast a number of votes equal to all other board members.

With generous grants of authority like these passing muster, it’s no wonder executives of corporations around the world are urging consideration to move the corporate headquarters to the land of tulips and windmills. Fiat Chrysler already did, at the behest of Italy’s Agnelli family, which controls the Italian-American car company with a tight grip. Mylan, a producer of generic pharmaceutical drugs, managed to fend off Israeli rival Teva Pharmaceuticals, using Holland’s tolerance of executive-friendly poison pill maneuvers to keep unfriendly takeover artists away.

Now that the move to an Amsterdam post office box is complete, Drahi is in the process of rearming his war chest for another assault on the American mainland. The French newspaper l’Humanité warns it is more conniving from the “telecom vampire” that sucked the blood out of competitive cable in France. The newspaper cited deregulation and privatization to be great for billionaires like Drahi, but a bad deal for consumers.

Since the 1990s, telecom executives in Europe and North America have promised regulators a lot in return for deregulation and self-oversight. Allowing companies a free rein would stimulate competition and private investment to finance and construct next generation networks, they claimed.

But l’Humanité uncovered another motivation for telecom magnates like Drahi: to get filthy rich. The newspaper quotes one well-known anecdote about why Drahi got into the cable business — because after studying Forbes articles ranking the fortunes of the 1%, Drahi set his sights on the industry where there were the most billionaires – telecommunications.

Keeping that newly privatized and deregulated wealth requires ruthlessness for others but protection for your allies and yourself. Drahi followed the teachings of American cable magnate John Malone (who is Charter Communications’ biggest shareholder today) and began a debt-fueled buying spree of independent cable systems, quickly followed by ruthless cost-cutting at the acquired companies, earning him the nickname “The Slasher,” among others less charitable. His critics say he has a lot of nerve, because in many instances Drahi billed the companies he acquired for consulting and management fees. BFM Business reports Drahi has only one bottom line when making up his mind: how much generated cash will come from the decision.

The real money would start rolling in at the height of the dot.com boom. Regulators accepted a bid by Drahi and two of his allies to create the fourth French telecom operator — a wireless venture known as Fortel. The three men promised to invest more than $3 billion building the network, an amount called “not credible” by some regulators and a number of industry leaders. But since the frequencies went to those who promised the most investment, Fortel won. Drahi was named president of the company.

Just before the dot.com bubble burst and Fortel seemed to be wavering, Drahi sold many of his interests to UPC, a European cable conglomerate owned by his mentor John Malone. In early 2001, the wireless project was scrapped and Fortel itself was sold for scrap, never to build the promised network. But by then, Drahi was working at UPC with Malone on a massive cable industry acquisition and consolidation strategy. During his career at UPC, Drahi was in charge of spending hundreds of millions of dollars to acquire French cable operators including: RCF, Time Warner Cable France, Rhone Cable Vision, and Videopole InterComm.

Malone’s company quickly became overextended and very deep in debt when they suddenly stopped paying creditors in the fall of 2002. But before that happened, Drahi once again had the good fortune to cash out of UPC before the roof collapsed, selling his own Médiaréseaux cable system to Malone’s company at full value just before UPC went bankrupt. The bankruptcy that followed didn’t hurt Malone much and Drahi not at all.

Unwilling to rescue UPC’s faltering operations before bankruptcy, Malone waited until after the cable company went Chapter 11, when 65% of its debt was erased in court proceedings in return for a $99.8 million fresh infusion of cash from UGC/Liberty Media — another Malone-controlled venture that suddenly emerged with a checkbook. That bought Malone’s Liberty Media a 65.5% stake in the rescued company. Vendors, smaller debtors, and other shareholders fared far worse. Most received little, if any of the money owed them, and the remaining shareholders were given just 2% ownership of the company after it emerged from bankruptcy.

Drahi re-emerged on the French business scene after squirreling away his UPC cable proceeds in his new venture Altice, originally launched in Luxembourg, listed on the Amsterdam stock exchange, and controlled by another holding company owned by Drahi housed in the British tax haven of the Channel Islands. Drahi himself was, for a time, a Swiss resident domiciled in Canton Zermatt, another tax haven with tax thresholds that favor the super-wealthy. Drahi now qualifies.

Within four years of Altice’s existence, the company has acquired 99% of France’s cable systems. Drahi has since looked abroad to consummate more deals.

When an Israeli cable system became available to buy, Drahi suddenly became a citizen of Israel and rented an apartment in the country, mostly to meet Israel’s citizenship requirements to acquire the HOT cable system. After the sale was complete, HOT raised its rates, most recently by 20 percent.

Le Echos, a French newspaper, has watched Drahi plow his way through French telecommunications for several years and summed up Drahi’s acquisition strategy in three words: It’s never enough.

The newspaper suspects Drahi will continue using the same techniques he has used in France for the last 20 years to create an empire in the United States. He will take on massive amounts of debt and use Wall Street and French investment banks to pay for most of his acquisitions, combined with generous shares in Altice stock for shareholders and top corporate executives. With Altice’s relocation complete, Drahi can make generous offers his targets cannot refuse, even when they are privately owned.

To start an American cable empire, Drahi will have to acquire smaller cable operators to build leverage for potential takeovers of larger operators later. His ability to throw massive sums of money on the table makes it very likely his next targets will be Cox Communications and Cablevision — both controlled by families that have held on in the cable business despite years of tentative acquisition offers or sales explorations. Both Cox and Cablevision offer access to larger U.S. cities. Other likely targets, including Mediacom, Cable One, and Midcontinent Communications, don’t. He can digest those companies later.

On June 24, Drahi told his fellow dinner guests at the Polytechnique Foundation, “For me, telecom is like pinball,” Drahi said. “As long as there are balls, I will play.”