As suggested in reports over the weekend, Time Warner Cable (NYSE:TWC, news) announced this morning that it has agreed to purchase smaller cable rival Insight Communications. The reported price tag is $3B, with which TW Cable will increase its customer rolls by 5%. The nation’s second largest cable company will also boost its presence in the markets of Kentucky, Indiana, and Ohio where Insight serves most of its 750,000 customers.
Insight is currently owned mostly by private equity firm the Carlyle Group, with Crestview Partners and MidOcean Partners having bought stakes recently as well. They have been for sale for some time, and thus this deal probably won’t surprise anyone if it in fact goes through. TW Cable expects to derive $100M in cost savings from the merger, the dark side of which means there will be layoffs on the horizon in Insight’s main three state markets.
Cable MSOs have been seeing some negative trends in their consumer business as online offerings such as Netflix and Hulu have been materially shifting the marketplace – though that is still at an early stage. However, the same cable MSOs have themselves been disrupting the SME side of things when it comes to business services, where their aggressiveness has been impacting both ILECs and CLECs. Earlier this year, TW Cable bought Navisite in a move on cloud and managed services to such clients. We haven’t heard that much since then on that front though.
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