While the stock market battered Cablevision Systems' stock Wednesday over speculation it may be in the hunt for Bresnan Communications' 320,000 customers, sources familiar with the auction said that Liberty Media chairman John Malone has emerged as one of a group of bidders that made it to the final round.
Although Bresnan, which went on the block in March, had set Tuesday as the deadline for final bids, sources familiar with the process said that offers continued to come in on Wednesday.
According to' executives in the cable financial community familiar with the Bresnan auction process, Malone is involved through Ascent Media Corp., the holding company for Ascent Media Group, which was spun off from Discovery Holding Co. (which held Liberty's interest in Discovery Communications) in 2008. Ascent, which is publicly traded, provides pre and post-production work for cable, broadcast and film, and is headed by former Liberty executive and long-time Malone confidant William Fitzgerald.
Fitzgerald is a 30-year veteran of the media and telecommunications industry and served as executive vice president and chief operating officer of Tele-Communications Inc. and later AT&T Broadband from 1998 to 2000. In 2000 he took over as chairman and CEO of Ascent as well as serving as senior vice president of Liberty Media.
Malone serves on Ascent's board of directors and controls about 30% of the voting power of the company, according to its most recent proxy statement.
Ascent Media and Liberty Media did not return calls for comment. Bresnan officials declined comment.
Ascent reported revenue of $453.7 million, a 22% decline as the company was battered by softness in the advertising and media markets. In the first quarter, the company saw some stability return, reporting revenue of $104.5 million (9.4% down from the prior year) and operating income before depreciation and amortization was down 4.3% to $3.6 million in the quarter.
Ascent shares, traded over the counter, were unchanged at $26.08 each in Wednesday trading.
Whether Ascent's bid would prevail still remains to be seen. According to sources familiar with the process, it is still too early to tell if any bid has emerged as the lead just yet. Between 6 and 10 bidders have made it to the final round, sources said. Bids are estimated to be the $1.2 billion to $1.6 billion range.
If Malone were to win Bresnan, it would be a return for the cable legend to U.S. distribution, a landscape he abandoned when he sold his TCI to AT&T in 1999. Malone has kept his various programming entities, including Starz Entertainment and stakes in various cable channels, while his Liberty Global is the largest cable operator in Europe. And he still owns a piece of satellite giant DirecTV. Despite that diversfied portfolio, he has always respected the value of cable distribution here in the States.
At Liberty's investor meeting last October, Malone commented on the pending Comcast NBC Universal joint venture, adding that if that deal passes regulatory muster it would cause other content and distribution companies to look closer at potential alliances.
"I've always believed that the power of distribution combined with the ability to distribute content creates quite a bit of value," Malone said at the October meeting.
Miller Tabak analyst David Joyce said that Malone has always been a fan of cable fundamentals, so a Bresnan deal would not seem out of character.
"Malone likes cable cash flow and at the right price, it's a good deal," Joyce said
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