Roughly one year after abandoning a plan to sell the company, Broadstripe, the St. Louis-based cable operator formerly known as Millennium Digital Media, has made its first acquisition, reaching an agreement to buy 50,000-subscriber James Cable Holdings.
“This purchase represents a valuable opportunity to significantly grow our business, to build upon our success as a telecommunications and entertainment company, and to provide outstanding products to our new customers,” Broadstripe CEO Bill Shreffler said in a statement. “We remain committed to investing in the communities that we serve and continually provide excellent customer service and state-of-the-art products in all Broadstripe markets.”
Broadstripe did not reveal the value of the deal. But according to executives in the cable financial community, Broadstripe is paying just under $2,500 per subscriber, or about $125 million for James Cable. That works out to about 12 times cash flow, a hefty price given James’ mostly rural footprint.
Broadstripe has about 110,000 subscribers in Michigan, Oregon, Washington and Ann Arundel County, Md. James Cable, based in Bloomfield Hills, Mich., has systems in Oklahoma, Texas, Georgia, Louisiana, Colorado, Wyoming, Tennessee, Alabama and Florida. The deal, which is expected to close by the first quarter of 2008, will boost Broadstripe’s subscriber base to about 160,000 customers.
New York based cable investment banker Waller Capital served as financial adviser to James Cable in the transaction.
The purchasel comes about one year after Broadstripe scrapped a deal in August 2006 to sell 70,000 subscribers in Washington, Oregon and Michigan to Wave Division Holdings and instead decided to recapitalize and expand its footprint.
Wave sued the company over that deal, a case that is still winding through the Delaware court system. About one month after the Wave deal was canceled Millennium hired Shreffler, a former Charter Communications and Suddenlink executive, as CEO. Shreffler changed the name to Broadstripe in October 2007.
James Cable was founded by cable pioneer Bill James in 1987. Bill James retired in 2005 as CEO of the company and was replaced by former Adelphia Communications district manager Kate Adams.
James Cable filed for bankruptcy protection in 2003 and emerged later that year after converting $88 million in debt to equity. As part of that deal, New York-based investment fund GoldenTree Asset Management became James Cable’s largest shareholder with 72% of its equity.
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