PREVIOUSLY:Altice to Buy Suddenlink Stake for $9.1B
Jerry Kent has built a reputation as one of the stand-up guys in the cable industry, fighting battles with programmers and telco and satellite competitors on the front-lines as CEO of Charter Communications and Suddenlink Communications and in Congress. But with the $9.1 billion sale of Suddenlink to Luxembourg telecom giant Altice just months away, the long-time cable executive is finally ready to step down.
“I’m an entrepreneur," Kent said in an interview of his decision to leave the company after the deal closes before the end of the year. "I really don’t have the desire to be working in a subsidiary of another company. And, frankly, they have their own CEO.”
Kent formed Suddenlink out of the investment company he founded in 2002 – Cequel III – shortly after resigning as CEO of Charter Communications in 2001. When BC Partners and Canadian pension fund CPPIB invested about $2 billion in the company in 2012, the initial intention was to use Suddenlink to roll up smaller operators. And though the company did a handful of smaller deals, those plans were put on hold (as other potential consolidators did the same) after Charter Communications began its pursuit of Time Warner Cable in 2013.
Suddenlink began talking to Altice in early February – one of its board members, BC Partners chairman Raymond Svider, knew Altice executives who were interested in entering the U.S. market.
“Raymond said, ‘I have an investment in Suddenlink, why don’t you take a look at it?’” Kent said.
The rest was history.
Kent added that Altice brings a strong balance sheet and a scale that Suddenlink just didn’t have.
“There was significant interest in being a consolidator,” Kent said. "We did a couple of deals, nothing really major. While we had ready access to capital, we don’t have the balance sheet that could participate in a [deal like] Time Warner Cable, for example. With fresh backing by Altice, I think the company will have a much better chance of being a significant consolidator in the industry.”
“Altice does have plans,” Kent continued. "They would like to grow in the U.S. I have no idea who or where. We just sold the company. I’m going to run this company as best I can until we close and then I’m moving on.”
Altice has been an aggressive buyer of cable and wireless properties in Europe – it has about 3.1 million cable customers but more than 20 million wireless customers. And it has equally aggressive plans for the U.S. In a conference call to announce the Suddenlink deal, Altice CEO Dexter Goei said the company expects to be a major participant in U.S. cable consolidation.
But they will have to do it without Kent at the helm. Less clear is what will happen to other Suddenlink managers.
“They will come in and talk to people and make their plans accordingly, but there have been absolutely no decisions made so far,” Kent said.
Just who Altice will try to buy is anyone’s guess. Aside from Cablevision and Time Warner Cable, two perennial takeover candidates, smaller operators like Mediacom Communications, Cable One and others would certainly attract interest.
As for Kent, he said he still has his investment company Cequel III, and while there are no restrictions on him re-entering the cable business, he expects to take it easy for at least a few months after the close.
“I have bought and sold several companies in the cable and in the broader telecommunications space,” Kent said. “I’m just going to look for the next great opportunity.”
But at least for the time being, Kent will have to sever at least some ties wth the business after the close. He is a member of the National Cable & Telecommunications Association board of directors, which requires board members to be executives at major cable operators. He also will likely have to sever relationships with CableLabs, Cable PAC and Cable Center at least for the time after the deal closes and whether he re-enters the business.
“That’s the bittersweet part,” Kent said. "I have had a lot of relationships in the industry that I have forged over the past 30-plus years and I value those relationships and have gotten to know a lot of people that I call good friends. I guess for now, I’ll be an exiting the cable industry at least for a period of time.”
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