While Altice USA has delivered rather overt hints that it is looking at Cable One as its next U.S. cable acquisition target, analyst Craig Moffett doesn’t believe a deal will happen soon.
Moffett concedes that there is a “unanimously held consensus that it is only a matter of when, not if,” Cable One is acquired by Altice.
“To be fair, Altice has fanned the flames by talking of IPOs to acquire more cable …. at a time when the list of potential targets is absurdly short,” he said in a note to investors. “Worse, they have on occasion even mentioned Cable One by name. "
But with its market capitalization growing nearly 32 percent this year, Moffett notes that the Phoenix-based MSO is trading at a 70 percent premium compared to Comcast.
At this point, he said, “Altice is bidding against itself. There is no synergy target, no radical cost reduction surgery, not strategic re-alignment that makes Cable One’s share price (that 70 percent premium to Comcast) make sense.
“We have entered the land of consenting adults only,” Moffett added. “For those willing to pay a 70 percent premium to Comcast in the hopes (sorry, I meant to say, with the expectation) that Altice will come and pay even more … fare ye well.”
Cable One was listed earlier this week in a USA Today ranking of media companies with the best stock performance this year, trailing only Time Warner Inc., a company with a stock priced goosed by its proposed takeover by AT&T.
Cable One reported a 7.5 percent rise in net income in the third quarter, fueled it said by the prioritization of residential broadband and business services, and the simultaneous marginalization of pay-TV and residential voice.
For his part, Moffett has dismissed Cable One’s gains as being predicated largely on consumer price increases.