In June 2015, when we wrote about Graham Holdings(GHC) spinning off Katherine Graham’s “best acquisition ever”, we noted that Cable One(CABO), then trading at $430, would make an interesting acquisition target as one of the few smaller independent public companies. Instead, Cable One, now trading at $639, is purchasing a smaller competitor, NewWave Communications, for $735 million in cash. NewWave, the 19th largest cable provider in the country has 245,000 Primary Service Units(PSU). The combined company will have 1.2 million PSUs, $1 billion in annual revenues, and 41% adjusted EBITDA margins.
Cable One posted a presentation on the acquisition here. Below are some key slides from the presentation. It will be interesting to see if the company is able to continue to scale or if an acquirer knocks on its door first. Aside from other cable companies, companies such as Verizon(VZ) are said to be exploring the possibility of purchasing a cable provider.
Disclosure: The author owns shares of Cable One