Struggling US cable television operator Cablevision Systems Corp, itself rumored to be the subject of bids last month from Time Warner Inc, US West Media Group and GTE Corp (CI No 3,151), is buying 10 cable systems in the New York area from Tele- Communications Inc, for $1.07bn in stock and assumed debt. In exchange for the systems and their 820,000 subscribers, Cablevision is reportedly going to fork over about 12.2 million of its Class A shares, valued at $400m, and assume roughly $675m of TCI’s debt. The systems are in New Jersey, Long Island and the counties of Rockland and Westchester, and Cablevision says they will increase its metropolitan New York customer base to more than 2.5 million, helping consolidate the company’s position as the only major player in the area aside from Time Warner Inc, operators of the Manhattan Cable systems. The Woodbury, New York company, which has seen losses over the last three years leave it with some $3.1bn debt, says the acquisition will give it the scale it needs to invest in a new generation of telecommunications and programming services. It claims that in the next two years it will deliver more than 100 cable channels, enhance its Rainbow Media local programming, offer advanced telephone and data services, and have more than 1,000 videos available on-demand. The company says more than half of the systems it is buying have been upgraded to 550Mhz or more, and generate between them more than $200m cash flow a year. For Englewood, Colorado-based TCI, the deal allows the nation’s largest cable operator to relieve some of the pressure of its $14bn of debt and gives it a stake of about 33% in Cablevision. It will also take two seats on Cablevision’s board. In response to the deal, Cablevision shares soared $9.50, or more than 27%, to $44.125, while TCI closed up $1.00 at $16.063.
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