I was sitting with a Suddenlink executive in the press room at INTX in Chicago two weeks back. I had just covered the "Captains o' Cable Industry" keynote, during which Cablevision's (NYSE: CVC) James Dolan notoriously proposed corporate marriage to Time Warner Cable's (NYSE: TWC) Rob Marcus right on stage as Charter's Tom Rutledge and several other CEOs looked on in horror.
"OK, which of those guys is going to buy your company?" I asked the Suddenlink exec. He politely smiled, of course, and did the non-suicidal move of avoiding that somewhat silly question.
"It's going to get interesting," he assured me.
As a huge fan of M&A intrigue, I didn't know what that sly smile he gave me meant at the time. But the check was probably already in the mail. On Wednesday, European cable speculators' telecom group, Altice SA, swooped in with a $9.1 billion deal to acquire a 70 percent controlling interest stake in St. Louis-based Suddenlink Communications.
At the time, media analysts were making Charter (NASDAQ: CHTR) an overwhelming post-Comcast-deal favorite to buy TWC.
I asked Needham's Laura Martin if she expected anyone to emerge and seriously challenge Charter--and its biggest backer, Liberty Media's John Malone--for TWC. "No, I don't expect any," she responded.
"Oh yeah, what about Patrick Drahi?!" I shot back ...
OK, I am totally full of it on that last part. I didn't know who Drahi was until Wednesday, when his burgeoning European telecom empire, Altice, made a stunning entry into the U.S. market, gobbling up one of the few remaining mid-sized cable assets in Suddenlink. Right away, Drahi becomes a major competitor, alongside Malone, to lead the consolidation of the U.S. cable market.
Few in the U.S. saw this coming.
Like a lot of folks in our industry, I have my beady eyes focused on U.S. operations, and didn't even consider a guy overseas who had been part of $31 billion worth of telecom deals in 2014 alone.
So who is this real challenger to Pax-Malone?
According to The Wall Street Journal, Drahi is a "self-made businessman," born in Morocco and emigrating to France as a teenager. Drahi, 53, started his professional career selling cable subscriptions door to door.
Today, his Luxembourg-based, Amsterdam-listed investment company owns cable and telecom assets in France, Belgium, the Dominican Republic and Israel, with a total market cap standing at $48 billion as of the end of Q1.
Altice has quickly emerged as a major force in the European telecom sector, completing a full takeover of SFR, France's second biggest wireless operator, in February.
Now, Drahi is using Suddenlink in the same way Malone and Charter are using their proposed $10.4 billion purchase of similarly sized Bright House Networks--as a stepping stone to get to TWC.
As my friend at Suddenlink told me, It's going to get interesting.--Daniel