We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cablevision Rating Downgraded by Moody's Prior to Altice Buy
Read MoreHide Full Article
Leading cable MSO (multi service operator) Cablevision Systems Corp. recently faced a downgrade of its corporate family rating from Moody's Investors Service.
Notably, in Sep 2015, Cablevision had entered into a definitive agreement with the European telecom group, Altice NV, through which Altice will acquire Cablevision for a consideration of around $17.7 billion. Just a few days ago, Altice overcame the final regulatory hurdle with the New York Public Service Commission (PSC) approving the proposed acquisition. The deal is expected to be completed this month.
In the meantime, Moody's Investors Service downgraded the corporate family rating of Cablevision by two notches to B1 from Ba2. The rating agency cited the regulatory approval of the takeover deal as the primary reason for the downgrade. Moody’s outlook on the overall rating is stable implying that no further downgrade is likely in the near term.
The rating agency is concerned about Cablevision’s high leverage and aggressive financial policies of Altice. According to Altice, the takeover deal will result in around $900 million of cost synergies per annum. However, Moody’s is of the opinion that this level of synergy cannot be achieved before 24 months.
High Hopes for Altice
Altice has recently been on an acquisition spree with focus on the U.S. cable companies. This strategy is in line with the European company’s objectives of cross-border expansion.
In May 2015, Altice entered the U.S. market through its buyout of cable operator Suddenlink Communications in a deal valued at $9.1 billion. Upon the successful completion of the Cablevision deal, Altice will become the fourth largest cable operator in the U.S. Altice was also looking to take over Time Warner Cable at that time, but eventually lost out to a higher bid by Charter Communications Inc. (CHTR - Free Report) .
Bottom Line
The U.S. cable TV industry has been witnessing a considerable downturn over the last six years. Bundled triple-play services by telecom operators and the evolution of Over the Top (OTT) video service providers like Netflix Inc. (NFLX - Free Report) , Hulu, Amzon.com Inc. (AMZN - Free Report) pose significant challenges to traditional video service providers.
Moreover, the recent merger of Charter Communications and Time Warner Cable is bound to induce competition within the MSO space. In this scenario, it is to be seen how Altice benefits from its acquisition of Cablevision.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Cablevision Rating Downgraded by Moody's Prior to Altice Buy
Leading cable MSO (multi service operator) Cablevision Systems Corp. recently faced a downgrade of its corporate family rating from Moody's Investors Service.
Notably, in Sep 2015, Cablevision had entered into a definitive agreement with the European telecom group, Altice NV, through which Altice will acquire Cablevision for a consideration of around $17.7 billion. Just a few days ago, Altice overcame the final regulatory hurdle with the New York Public Service Commission (PSC) approving the proposed acquisition. The deal is expected to be completed this month.
In the meantime, Moody's Investors Service downgraded the corporate family rating of Cablevision by two notches to B1 from Ba2. The rating agency cited the regulatory approval of the takeover deal as the primary reason for the downgrade. Moody’s outlook on the overall rating is stable implying that no further downgrade is likely in the near term.
The rating agency is concerned about Cablevision’s high leverage and aggressive financial policies of Altice. According to Altice, the takeover deal will result in around $900 million of cost synergies per annum. However, Moody’s is of the opinion that this level of synergy cannot be achieved before 24 months.
High Hopes for Altice
Altice has recently been on an acquisition spree with focus on the U.S. cable companies. This strategy is in line with the European company’s objectives of cross-border expansion.
In May 2015, Altice entered the U.S. market through its buyout of cable operator Suddenlink Communications in a deal valued at $9.1 billion. Upon the successful completion of the Cablevision deal, Altice will become the fourth largest cable operator in the U.S. Altice was also looking to take over Time Warner Cable at that time, but eventually lost out to a higher bid by Charter Communications Inc. (CHTR - Free Report) .
Bottom Line
The U.S. cable TV industry has been witnessing a considerable downturn over the last six years. Bundled triple-play services by telecom operators and the evolution of Over the Top (OTT) video service providers like Netflix Inc. (NFLX - Free Report) , Hulu, Amzon.com Inc. (AMZN - Free Report) pose significant challenges to traditional video service providers.
Moreover, the recent merger of Charter Communications and Time Warner Cable is bound to induce competition within the MSO space. In this scenario, it is to be seen how Altice benefits from its acquisition of Cablevision.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>