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Altice purchase of Suddenlink boosts U.S. cable stocks

There's a new player in the U.S. cable dating game.

European cable and mobile phone operator Altice, controlled by founder Patrick Drahi, is fixing its sights on the U.S. market, starting with a $9.1 billion deal for St. Louis-based Suddenlink.

There are likely to be more such purchase attempts. Altice, which has grown through a series of acquisitions over the past dozen years, said Wednesday that it envisions U.S. operations making up about half its business.

The comment and stock analysts' speculation about Altice's next takeover target sent some cable stocks soaring.

Shares of Cablevision Systems Corp. rose $3.77, or 18 percent, to close at $24.69.

Pivotal Research analyst Jeffrey Wlodarczak, in a note to investors, said Wednesday that Altice's entry into the U.S. market "increased" the chances of Bethpage-based Cablevision joining with either Altice or Time Warner Cable. He raised his recommendation on Cablevision shares to "buy" from "hold." Cablevision owns Newsday.

"Cablevision has a long-standing policy of not commenting on rumors and speculation in the media," said spokeswoman Lisa Anselmo.

A wave of consolidation has swept the cable and satellite TV industry as U.S. viewers increasingly turn to Internet providers like Netflix for their TV fix. At the same time, cable companies' costs for channels have grown.

Suddenlink is the seventh largest cable operator in the United States, with 1.5 million residential customers in smaller markets in the South, West and Midwest. Like other smaller cable companies, it is having a harder time in the pay-TV market. Such companies say their costs per subscriber are higher than those of such cable giants as Comcast.

Comcast's own $45 billion quest for No. 2 rival Time Warner Cable was recently quashed by regulators wary of the bigger company's potential power to undermine competition from online video providers. That bid's failure has set off expectations that Charter Communications, backed by cable magnate John Malone, will try to buy Time Warner.

Time Warner shares Wednesday closed up $8.55, or 5 percent, to $166.55. Charter shares Wednesday closed down $4.69, or 6 percent, to $176.95.

Meanwhile, AT&T is waiting for regulators to clear its $48.5 billion purchase of satellite TV provider DirecTV.

Reports that Altice is also interested in Time Warner mean industry consolidation is likely to favor shareholders of the New York company, wrote Jefferies analyst Mike McCormack in a client note Wednesday.

A Time Warner spokesman declined to comment. Altice spokesman Arthur Dreyfuss also declined to comment.

With Suddenlink, about 12 percent of Altice's portfolio would be U.S. business, the company said. "The goal is to be 50-50," Altice CEO Dexter Goei said.

With James T. Madore


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