Steve Simmons is a former cable executive no longer, having cut a deal to
buy some cable systems from overbuilder RCN Corp. for $265 million.
The
former Simmons Communications Corp. CEO's deal for RCN's 80,000 subscribers in Princeton
and other parts of New Jersey comes to $3,100 per subscriber and about
11 times running-rate cash flow.
But Simmons' venture, Patriot Media & Communications, has committed to investing an additional
$550 per subscriber to rebuild most of the operation the next few years.
Still, that's far less than
the $5,000-plus systems were fetching two or three years ago.
RCN will be using cash from the sale -- which will be sheltered from taxes --
to add customers to its systems overbuilding other cable operators.
The systems being sold generate about $55 per subscriber in monthly revenue
and around $26 per subscriber in operating cash flow.
Simmons denied reports from other industry executives that he had to cut his
initial bid because he couldn't line up financing.
While he wouldn't offer details, he said longtime media investor Spectrum
Equity Investors is putting up much of the equity in the deal and lenders he
would not identify have been lined up to cover the rest.
"This is a great time to get back into the business," Simmons said.
He'll be establishing a headquarters in Greenwich, Conn., and will seek other
acquisitions.
