WideOpenWest shares were up more than 12% Thursday after a report in Bloomberg News claimed the Denver-based overbuilder was “exploring options” including a sale.

According to the Bloomberg report, people familiar with the matter say WOW has hired an adviser to drum up interest in the company.

WOW spokesperson Jamie Mayer declined comment, adding that the company does not comment on rumor and speculation.

WOW shares closed at $20.02 each on Thursday, up 12.5% or $2.23 per share, as investors scrambled to take advantage of a possible deal. The stock was up another 3% in after-hours trading April 7 to $20.75 each. 

Despite Thursday’s rise, WOW stock is still down about 7% for the year. 

Based in Denver, WOW has about 532,900 subscribers and last year sold systems in five markets to Astound Broadband and Atlantic Broadband (now Breezeline) for a combined $1.786 billion. WOW's largest individual shareholder is Crestview Partners, the New York-based private equity fund that counts cable pioneer Jeffrey Marcus as its vice chairman. Marcus retired as a partner at Crestview in 2019, but is still WOW's chairman of the board. The company CEO is long-time telecom executive Teresa Elder, who joined WOW in 2017. 

Full year 2021 revenue was down 1% to $725.7 million and cash flow rose 9% to $261.6 million. WOW ended 2021 with 532,900 voice, video and data subscribers, up 10,000 from the prior year. The company operates in 14 markets in Michigan, Alabama, Tennessee, South Carolina, Florida and Georgia. 

Deal multiples have risen in the past few years, with Stonepeak Infrastructure Partners’ $8.1 billion purchase of Astound Broadband one of the highest — an estimated 14.1 times cash flow. Given that multiple, WOW could be worth as much as $3.65 billion, but even at more traditional multiples of 7 times to 10 times cash flow, the company could fetch between $1.8 billion and $2.6 billion.

Possible suitors could range from private equity and other financial players to strategic buyers like Altice USA (whose bid to buy Atlantic Broadband in 2020 was rebuffed by that operator’s Canadian parent); Astound Broadband (which purchased WOW’s Anne Arundel, Maryland; Chicago; and Evansville, Indiana systems last year for $661 million); and Breezeline (which purchased WOW’s Cleveland and Columbus, Ohio systems last year for $1.125 billion). ■

 MoffettNathanson LLC, the equities research firm founded by long-time media analysts Craig Moffett and Michael Nathanson, is in talks to be bought out by SVB Leerink, a unit of investment firm SVB Financial Group, according to a Bloomberg News report. The deal is said to be in the very early stages of development and could unravel.  

Moffett, a former media analyst at Bernstein Research, formed Moffett Research in May 2013,  and less than two months later added former Nomura Securities and Bernstein colleague Michael Nathanson to the masthead. The firm quickly established a reputation for insightful analysis in the media, communications and internet sectors and in 2018 expanded into the payments and processing space led by former Bernstein analyst and MoffettNathanson partner Lisa Ellis.

Buying MoffettNathanson would be a departure for SVB Leerink, which has focused on the healthcare industry in the past. But the firm has been expanding its horizons lately, hiring nine former UBS Group investment bankers in May to populate its newly former technology investment banking group. 

Moffett declined to comment. SVB did not immediately respond to a request for comment.

Cox Communications said Tuesday that it has agreed to purchase the commercial enterprise and carrier business of fiber company Segra from private equity company EQT Infrastructure. Terms of the deal were not disclosed, although some published reports put the value of the deal at around $3 billion.

Segra, based in Charlotte, North Carolina, is one of the largest privately held infrastructure providers in the country. As part of the deal, EQT will retain Segra’s residential and small-to-medium sized business segment in Virginia and North Carolina. Cox will acquire Segra’s commercial services segment, which serves commercial enterprise and carrier customers in nine states in the Mid-Atlantic and Southeast. 

“Cox is focused on buying and investing where it makes sense, and we believe that the demand for broadband infrastructure will continue to grow, making fiber an attractive area for long-term investment,” said Cox president and CEO Pat Esser in a press release. “Acquiring Segra’s commercial services business is another key milestone in our pursuit of strategic infrastructure to ensure that we're providing the best products and services to our customers.”

Blomberg first reported Monday that Cox and EQT were in talks concerning Segra, estimating that the deal, including assumed debt, would be worth about $3 billion. 

This is the latest in a string of fiber network infrastructure investments Cox has made over the years, including EasyTel,  EdgeConneX, InSite Wireless, StackPath, Unite Private Networks and ViaWest. Once the deal is closed, the enterprise and carrier unit will retain the Segra name and its existing management team, operating as a standalone business within the Cox family of companies. 

“Our relationship with Cox will allow Segra to leverage expert resources, capabilities and strategic insights in order to scale up operations and accelerate long-term growth,” Segra CEO Timothy Biltz said in a press release. “Cox and Segra are equally devoted to the communities we serve. We will be even more strongly positioned to meet growing demand from carrier and enterprise customers for high-bandwidth fiber-infrastructure solutions. I would also like to thank EQT for its continued guidance and invaluable support as we worked to grow the business over the last nearly four years.”

Bank Street Group LLC and Goldman Sachs and Co. LLC acted as financial advisors and Simpson Thacher & Bartlett LLP acted as legal advisor to Segra in connection with the transaction.

Fitch Ratings said debt ratings for Cox Enterprises and Cox Communications would not be affected by the transaction. Cox Enterprises has ample cash on hand after selling a majority stake in its TV and radio stations to Apollo Global Management in 2019, Fitch noted, and Cox Communications was expected to "continue to invest in strategic growth opportunities through its Cox Business segment." The deal enables Cox to exploit its fiber infrastructure and "address the overall growing demand for high capacity fiber in the commercial enterprise and carrier segment. It also allows CCI to continue its efforts to expand its addressable market footprint both organically and inorganically," Fitch said in a statement.

Wave Broadband, a unit of Astound Broadband, said it has completed the purchase of commercial fiber services provider Digital West, a move that should expand its offerings throughout California’s Central Coast region. Terms of the deal were not disclosed.   

In a press release, Wave Broadband said all existing Digital West services, products, and customer support will continue without interruption and that Digital West will operate within the Wave region as part of Wave Business Solutions. The companies plan to commit resources toward enhancing products, services and value for Digital West customers in the future.   

Digital West is based in San Luis Obispo, California, and serves commercial clients, including carriers, small businesses, and medium-to-large enterprise clients.

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“The Central Coast is home to a fast-growing and dynamic business community, one which we believe can benefit significantly from the combined services and capabilities our companies provide,” Astound Broadband CEO Jim Holanda said in a press release. “Our resources will enable Digital West’s talented local team to connect area business customers over our combined network to more locations in California and across the country, leveraging our technology and capital to broaden Digital West’s service offerings and accelerate their growth.”  

Astound was purchased by Stonepeak Infrastructure Partners in November in a deal valued at about $8.1 billion. The company includes RCN Corp., Grande Communications, Wave and EnTouch Communications and has about 1 million customers in Northern California; Oregon; Washington; Chicago; Eastern Pennsylvania; Massachusetts; New York City, Washington, D.C.; and Texas.  

“During the past two decades, Digital West’s team has established a strong local heritage of providing exceptional broadband and connectivity services for thousands of businesses of all sizes, at every stage of growth, in a wide variety of industries,” said Tim Williams, Digital West founder and CEO. “With our new partners, we look forward to accelerating our growth, adding new offerings, and continuing to provide the high levels of service that business customers have come to expect from Digital West.” 

Nielsen said its board of directors have expanded its strategic review beyond to disposition of the company’s buy segment and could lead to a sale of the company.

The expanded review includes an assessment of a broad range of options, including continuing to operate as a public, independent company; a separation of either Nielsen's Buy or Watch segment; or a sale of the company, the company said.

Nielsen in July launched the review of its buy segment, which has been a drag on the company’s earnings. In the second quarter buy segment revenue was down 4.1% to $789 million. Nielsen’s buy segment provides marketing information about what people buy on a global basis.nt

Nielsen’s stock plunged when it announced the strategic review, lower earnings and CEO Mitch Barns’ plans to retire.

Following those announcements in August, hedge fund Elliott Management announced it owned an 8.8% stake in Nielsen and urged the company to put itself up for sale.

Nielsen said its expanded strategic review is being led by James Attwood, executive chairman of the board. The company has hired J.P. Morgan Securities LLC and Guggenheim Securities LLC as financial advisors, and Wachtell, Lipton, Rosen & Katz as legal counsel in connection with the review.

"The Board continues to support the company's strategic priorities, including Total Audience, the Connected System and our operational transformation, including cost out initiatives and consolidations designed to increase agility. However, the Board believes that a broad review of strategic alternatives is in the best interest of the company and its shareholders," said Attwood. "As the Board conducts its review, we and our valued associates remain focused on providing clients with the most complete understanding of what consumers watch and buy with mission critical data that enables markets around the world to act faster, more efficiently and with greater confidence."

Nielsen’s board said it is moving “expeditiously” but has not set a timetable for the completion of the review and that there was no assurance the review will result in a transaction.

MoffettNathanson principal and senior analyst Craig Moffett continued to be among the voices of reason after Verizon CEO Lowell McAdam reignited speculation the telco could be on the hunt for a transformational deal – read: Charter or Comcast – adding in a blog post that the telco simply can’t afford a big transaction.

Speculation has been high for months that Verizon, egged on by AT&T’s pending mega-merger with Time Warner Inc., would counter with a monster deal of its own with either Charter or Comcast. While the stock has settled since January, when reports first surfaced that the telco was eyeing a possible deal with Charter, McAdam told Bloomberg last week that he was open to merger talks with Comcast, Disney, CBS or any other major entertainment company that presented a compelling argument. 

Verizon definitely needs to do something – it is losing Fios TV customers and competition is getting thicker in its wireless business. But shelling out the tens upon tens of billions of dollars needed to fund a merger with Charter, Comcast, or Disney, would not be an easy task.

Now, McAdam didn’t necessarily say what end of the table Verizon would be on in any of those deals – buyer or seller – but most of the speculation has been around it being the buyer. And it also should be noted that McAdam didn’t say he was in talks with any of these companies, just that he would be open to talking with them, which, to be honest, he would have to say no matter what. Saying otherwise would only make them more vulnerable to shareholder suits.

But if investors see Verizon as being a deep-pocketed and free-spending buyer to right its listing ship, Moffett threw an ocean of cold water on the prospect.

In his blog posting, Verizon – A Sobriety Test, Moffett first notes that the telco’s leverage ratio has risen to about 2.6 times cash flow (its highest ever) as its profitability has eroded. While that would appear to provide some room for a deal – its target multiple is 4 times – the telco’s true leverage (which includes capitalizing all its operating leases and adding them to debt) that ratio rises to 3.4 times. Moffett added that Verizon has flirted with higher total leverage (3.5 times) in 2013 when it purchased the remaining interest in Verizon Wireless from Vodafone for $130 billion in cash and stock. But he noted that times were vastly different then – when it closed that deal in February 2014, Verizon’s organic revenue growth rate was 6.2%. In the just-passed first quarter, Verizon’s consolidated growth rate has plummeted to -4.5%.
“To state the obvious, the credit profile of a company growing at 6% is a bit different than that of a company shrinking by an almost like amount,” Moffett wrote.

So that would put a damper on how much cash Verizon could put into a big deal. But what’s that you say? Most companies want equity anyway, for the tax benefits? Verizon stumbles on that front too.

According to Moffett, the biggest wet blanket in an equity deal was, is and always will be Verizon’s stock dividend commitment.

“Ordinarily, limitations to one’s balance sheet require that acquisitions be financed with equity instead,” Moffett wrote. “But for Verizon, issuing equity doesn’t just dilute earnings. It also carried with it a 5% coupon.”

Declining free cash flow has already put pressure on Verizon to cover its dividend. Moffett noted that in the first quarter, Verizon reported a free cash flow loss, which meant it couldn’t cover the dividend. Even using adjusted free cash flow, Moffett wrote that first quarter results suggest that Verizon’s dividends are 70% higher than their normalized free cash flow.

Moffett added that Verizon isn’t precluded from doing any deals, just ones where it has the highest free cash flow yield. It could do a deal similar to AT&T’s 2015 purchase of DirecTV. But Moffett added that the reason AT&T was able to buy DirecTV at a discount to its own valuation was that DirecTV was already priced for what Moffett called “secular decline.”

“Now, two years later it is indeed secularly declining (after adjusting for the forced migration of U-verse subscribers) and AT&T will soon be worse off for having bought it,” he wrote. “With the writing already on the wall, AT&T was forced to go back to the well to buy yet another massive asset, Time Warner, Inc., less than a year after their DirecTV deal closed.”

Buying an asset that is trading at a premium to Verizon – like Charter, Comcast, Dish or Disney – would make the dividend coverage and leverage ratios worse, he wrote. And one much talked about solution – buying a better asset but selling off its existing Fios assets to help finance the deal – only works if they can sell those assets at a higher multiple than the ones they are buying. That wouldn’t be easy.

The difficulty in finding a path to a deal goes both ways. Moffett noted that Charter’s big shareholder John Malone wouldn’t likely be eager to swap Charter (growing at a 7% clip) for equity in a company that is declining 4.5% with a dividend commitment currently more than 100%.

Moffett closed with his reasoning for upgrading Verizon to “buy” in February – the stock was cheap and sentiment was overly bearish.  

“Included in that overly bearish view was (is) the expectation that Verizon will do a badly dilutive acquisition,” Moffett wrote. “Perhaps they still will. But our analysis here suggests they may have less flexibility to do so than most seem to think.”

Fueled by two major deals involving Liberty Global and broadcaster Nexstar Broadcasting Group, media M&A deals were up 69% in the first quarter according to research firm Mergermarket, even as the overall deal climate contracted.

Liberty Global and Vodafone’s $6.97 billion joint venture to combine their Dutch cable assets and Nexstar Broadcasting’s pending $4.6 billion purchase of Media General, helped drive the media segment for the quarter, which finished at 117 deals worth $20.4 billion, a 69% increase from the $12.1 billion last year. The media segment was the only sub-sector that showed gains in the period, according to Mergermarket. In total, about 583 telecom, media and technology deals were made in Q1 worth $85 billion, down 45.5% from the 745 transactions valued at $156 billion last year.

While deal volumes and values across the tech and telecom sectors were down for the year, Mergermarket expects activity to pick up as the growing importance of the Internet of Things, big data, could computing and mobile platforms could drive deals. In the media sector, continued consolidation and the need for scale should also keep transactions high.

“Media in the first half of 2016 could see an increasing trend toward consolidation as the need for cost synergies grows within the sub-sector,” Merger market said in its report.

Although the mergers & acquisitions market is on a pace to exceed $3 trillion in worldwide deal value in 2015 -- its best year since 2007 -- some leading U.S. dealmakers are beginning to doubt if that pace is sustainable, according to research from law firm Dykema Gossett PLLC.

According to Dykema’s 11th Annual M&A Outlook Survey, only 37% of  respondents to the survey said they believed the M&A market would strengthen in the next 12 months down from 59% in 2014. About 20% said they expected the market to weaken, compared to 9% in 2014.

 While the majority of respondents expected no change in M&A next year, the concern is the most dealmakers have shown in the survey in years, according to Dykema.

In the U.S., the law firm said M&A concerns reflected those for the overall U.S. economy – just 48% of all respondents has a positive outlook for the overall U.S. economy over the next 12 months, the lowest level since 2012.

Pockets of intense deal activity remain – healthcare and technology were at the top of the list, while media ranked No. 12. According to Dykema, healthcare M&A reached $484.2 billion through early September, up from $274.5 billion for the same period in 2014.

Technology deals experienced a similar jump, rising from $268.3 billion in early September 2014 to $356.2 billion through the same point this year.

"M&A activity in 2015 surged for much of the year, but respondents clearly are wondering how long it can last,” co-leader of Dykema’s M&A practice Tom Vaughn said in a statement. “Many of the strong overall results were driven by megadeals, but we agree with the findings that while the outlook for the next year is not as strong as it was a year ago, there is still a great deal of positive momentum in the M&A market.”

Dykema distributed its M&A Outlook Survey via email during August and September to a group of senior executives and advisers including CEOs, CFOs and other company officers. The 147 respondents to this survey represent a cross-section of M&A professionals and advisers with a diverse group of professions and more than a dozen sectors represented, including healthcare, technology, industrial/manufacturing and financial services. Respondents represent companies whose annual revenues range from under $1 million to more than $1 billion

TV station mergers & acquisitions volume fell to $7.3 billion in 2014, according to research house SNL Kagan, short of the $11.4 billion recorded in 2013 as consolidation in the sector slowed.

 According to Kagan, five large TV stations mergers worth between $684 million and $2.7 billion were tallied in 2013, but only two such deals – the largest being Media General’s $2.5 billion purchase of LIN Media – were recorded in 2014. Kagan blamed the consolidation slowdown partly on increased Federal Communications Commission regulations regarding broadcast ownership.

Overall, 145 full-power TV stations changed hands, bringing the average price per station to $49.1 million, compared to 286 full-power TV station sales for $38.9 million average in 2013, Kagan said. The average forward seller’s broadcast cash flow multiple for TV stations remained steady at 8.1 times (8.2 times in 2013).

Total broadcast M&A volume reached $8.7 billion for the year, according to Kagan, mainly fueled by a big increase (48%) in radio station deal volume. In total, 258 AM and 501 FM stations were sold, vs. 219 AM and 419 FM stations in 2013. The average price for an FM station rose from $2.0 million in 2013 to $2.5 million in 2014; average prices for AM stations rose slightly from $0.76 million to $0.86 million.