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Cable Wars Over Bresnan Communications

Cable pioneers John Malone and Charles Dolan are the remaining bidders for cable television company Bresnan Communications, according to people close to the process and hopes are the price will exceed eight times the company’s expected EBITDA in 2010.

The actual amount of EBITDA, however, remains a point of contention because it will depend on whether Comcast chooses to sell its current stake in Bresnan as part of the deal.

Comcast currently offers Bresnan programming discounts as a part owner of the system and would withdraw those discounts if it sells its stake.

Currently, Comcast (which will soon control NBC Universal) is expected to sell its stake in Bresnan. Nonetheless, the price tag has already climbed above $1 billion and will no doubt exceed the public market multiples for the cable industry.

The presence of Malone (through Ascent Media) and Dolan (Cablevision) is no doubt rooted in their financial view of the deal, but both men were close to Bresnan’s founder William Bresnan, who died last year.

Cablevision, which is controlled by the Dolan family, has been making a concerted effort to be more shareholder-friendly over the last year. But the possibility it will buy Bresnan is raising questions among its shareholders about whether that shareholder-friendly era has come to a close, given it would be buying 320,000 cable customers who reside thousands of miles away from its core territory in the New York metropolitan area.

One reason Cablevision could be looking at Bresnan is taxes. A Bresnan buy would step up its tax base and allow it to extend certain tax benefits.

As for when the deal will get done, sources tell me the hope is to announce a winner by Monday, June 14.

Comcast is in the process of acquiring a 51 percent stake in NBC Universal, CNBC's parent company, subject to regulatory approval.

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