Pac Premier
Giving Guide
You are here:  Home  >  Columns  >  Current Article

Cable wars put Central Coast in play

By   /   Friday, May 6th, 2011  /   Comments Off on Cable wars put Central Coast in play

    Print       Email

Consolidation appears to be on the way for the Central Coast’s Balkanized lineup of telecom providers.

But precisely how the lineup will look if and when Charter Communications unloads its North Santa Barbara and San Luis Obispo counties holdings is hard to say.

In a report that remains to be fully confirmed, Bloomberg News reported in late April that Charter had hired Citigroup and Goldman Sachs to sell California systems, with roughly 350,000 subscribers. The places in question include Redding, Chico, some locations in Los Angeles as well as most of San Luis Obispo County and  Lompoc.

Long the sick player in a relatively vibrant industry, debt-laden Charter Communications was controlled by Microsoft co-founder Paul Allen’s Vulcan Ventures. But St. Louis-based Charter went through bankruptcy reorganization in 2009 and emerged with new controlling shareholders, including private equity firms Apollo Global Management and Oaktree Capital. A different arm of Apollo owns Carpinteria-based fast-food firm CKE Restaurants.

Right now, a handful of cable television giants operate separately up and down the region — each offering a different menu of television, Internet and dialtone offerings. While Charter has most of SLO County, Santa Barbara County’s two biggest players are Cox in the South Coast and Comcast, which has most of the Santa Maria Valley. Meanwhile, Ventura County is largely part of Time Warner’s sprawling Los Angeles cable operations.

Ian Olgeirson, senior analyst at SNL Kagan in Denver, thinks the timing of a sale may be favorable for Charter, which continues to restructure its debts, offering $1.5 billion of 10-year notes on May 3. Others think the California units could fetch as much as $2 billion, an amount that would go a long way toward debt reduction.

The California systems are likely to be among the highest-value properties, and if a sale goes through, “it could be part of a long-term exit strategy” for Charter, said Olgeirson.
Olgeirson said Time Warner has indicated it has room to make selective purchases and some or all of the Charter California systems would make sense for Time Warner’s heavy California presence.

But, he said, Comcast could easily absorb the Lompoc and SLO County systems into its vast network — and not raise too much of a stir with regulators.

The Central Coast systems have some advantages, including the fact that Verizon has not yet deployed its FiOs bundle of TV, broadband and phone offerings in the area. Nor has AT&T deployed a fiber-based system in the areas it serves in the Tri-Counties.

And, Olgeirson said, both Time Warner and Comcast have the expertise to upgrade the systems at relatively low cost and reap significantly higher revenue. That’s part of what happened in Ventura County when Time Warner took over dilapidated systems from scandal-plagued Adelphia cable a number of years ago.

Sitting in the catbird seat is Cox Communications, which has a stronghold in the Santa Barbara-Goleta-Carpinteria area, where the mix of business and residential lines is favorable and where incumbent Verizon is only beginning to talk about bringing FiOs to each neighborhood.

Because Cox is privately held, it can certainly parry even the most aggressive moves by either Time Warner or Comcast. But having one system operator delivering cable TV and broadband from the Santa Ynez Valley all the way to Paso Robles would make it easier for businesses to deliver consistent marketing messages in the Central Coast — and raise rates.

• Contact Henry Dubroff at [email protected].

    Print       Email

About the author

Chairman & Editor

You might also like...

Real Estate: With drought looming, Cayucos gets 420,000 gallons of new water storage

Read More →