BCI Broadband, a new player on the cable systems scene headed by two former Bresnan Communications executives, has agreed to purchase small market MSO Allegiance Communications in a deal the company says could be the first in an aggressive growth plan.
BCI is headed by former Bresnan president Jeff DeMond and former Bresnan chief financial officer Andrew Kober. BCI is backed by BBH Capital Partners, the private equity division of investment bank Brown Bros. Harriman.
Both DeMond and Kober spent more than 20 years at Bresnan, leaving the company after it was purchased by Cablevision Systems in 2010 for $1.4 billion. In a press release, DeMond said that BCI has managed to keep the Bresnan management team largely intact, which positions the new entity to maximize the potential of the Allegiance properties and any other future targets.
“Our success across much of rural America as well as markets in Chile and Poland was built upon a distinctive balance of aggressive, yet thoughtful capital investment and a single-minded focus on the customer experience,” DeMond said in a statement. “Our team looks forward to once again creating value for our partners while providing immediate benefit to both existing and new subscribers in the former Allegiance communities."
Allegiance has about 40,000 customers in Oklahoma, Texas, Arkansas, Kansas and Missouri. Terms of the deal were not disclosed but members of the cable financial community estimated the purchase price was about $50 million.
"It has been a privilege for Allegiance Communications to be able to serve communities across the American heartland states," said Allegiance CEO Bill Haggarty in a statement. "All of the Allegiance employees look forward to completing the transaction and joining with the BCI team as they bring their track record of operational success to the Allegiance footprint and work together in their communities to execute on the BCI plan to deploy next-generation broadband services including faster internet speeds, more high-definition television offerings and a broader rollout of digital voice services."
Upon completion of the transaction and subsequent capital investment, BCI will deploy advanced broadband networks that will pass more than 150,000 homes and businesses in the Allegiance footprint with high-quality services including, modern, very high-speed Internet, high- definition video and voice services, across an upgraded fiber network.
"Through this transaction, we have created a partnership with one of the cable industry's truly premier management teams, whom we have known and done business with for nearly 25 years," said Brown Brothers Harriman & Co. partner and co-manager of BBHCP Jeffrey Meskin in a staement. "We share the same commitment to operational excellence that Jeff DeMond and his team have historically demonstrated and look forward to a long, rewarding partnership as we step off with this purchase of the Allegiance assets and continue to build a next-generation broadband platform."
New York cable investment banker Waller Capital served as financial adviser to Allegiance. Allegiance is owned by New York private equity fund The Wicks Group. NewBay Media, parent of Multichannel News, is an affiliate of The Wicks Group.
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