The New York Public Service Commission will take a little longer to render a verdict on Altice’s $17.7 billion acquisition of Cablevision Systems.
Originally scheduled to say yay or nay – or at least impose some stiff conditions on the proposed merger – no later than April 29, the PSC has set a new deadline of May 20.
The new deadline is not expected to delay completion of the deal, which includes $10 billion in cash and Altice’s assumption of existing Cablevision debt and is still expected to close in the first half of this year.
However, the contents of the PSC’s anticipated ruling may give the merging parties pause. Several groups – including regional labor unions, various New York City and New York State offices and watchdogs like the Bethpage-based Fair Media Council – have blasted the sale, which would include Newsday, the entire multi-state News 12 operation and their corresponding websites, as well as Cablevision’s Wi-Fi, phone and cable-television services.
The opponents’ primary concerns rest with Altice Group, the Netherlands-based multinational telecoms provider owned by French entrepreneur Patrick Drahi – specifically, with Altice’s history of acquiring regional operations and slashing their local payrolls and services.
In a Sept. 17 conference call with investors, Altice executives discussed their intentions to cut hundreds of millions of dollars in Cablevision expenses within months of taking ownership, primarily through reductions in Cablevision’s 14,000-strong workforce. Rumors are also swirling about consolidations between Cablevision and Suddenlink Communications, a 2015 Altice acquisition based in Missouri.
That $9.1 billion acquisition earned Federal Communications Commission approval in December, based on a U.S. Department of Justice review of antitrust concerns. According to the FCC, the Suddenlink Communications acquisition – which gave Altice control of the nation’s seventh-largest cable operator, with 1.5 million customers across 17 states – is “unlikely to result in any significant public interest harms.”
In fact, the deal “is likely to result in some public interest benefits,” the FCC said in its approval statement, including new investments in local facilities and broadband services across Suddenlink Communication’s service area.
The Communications Workers of America is less chipper about the proposed Cablevision acquisition. Union members have voiced loud opposition at PSC hearings on Long Island and in other regions, and have actively recruited other groups – including the New York City Franchise Concession Review Committee and the Connecticut Public Utilities Regulatory Authority – to the cause.
Drahi, meanwhile, has been in financial analysts’ crosshairs, with several deriding the “cost-cutting king’s” pattern of acquiring new companies, running up both profits and debt and then cutting costs to the bone. Some refer to Drahi’s slashing style as “ruthless.”
Fuel for the fire: Suddenlink Communications, which was obtained earlier in the year in a deal that officially closed in December 2015, reported a net loss of $227.1 million for 2015, compared to a $19 million profit in 2014. The company cited non-recurring expenses associated with the Altice acquisition and an increase in share-based compensation related to the deal.
Also dissatisfied with the Cablevision deal is Fair Media Council CEO and Executive Director Jaci Clement, who’s worried about the potential Cablevision job cuts and the “vulnerability” created by Long Island’s coastal geography, making the dissemination of information via cable, Internet and Wi-Fi during an emergency situation a paramount concern.
It’s “incomprehensible that such a high-risk sale shall be approved for one of the region’s biggest employers,” Clement said in a letter to the FCC, adding Cablevision’s distribution of emergency information to 3.1 million customers in New York, New Jersey and Connecticut “stands to suffer readily should Altice not find the profit margins they need.”
While the PSC deliberates, the FCC’s Wireless Competition Bureau is scheduled to continue accepting public comment on the proposed Cablevision acquisition through May 4. If the deal is ultimately approved by New York and federal regulators, the Netherlands-based Altice – which in March reported $19.4 billion in 2015 revenues – will become the fourth-largest cable operator in the United States.