Michael Willner was the cable industry’s most popular CEO — and one of its most prominent representatives — up until February, when The Carlyle Group sold Insight Communications for $3B to Time Warner Cable. Now Willner and fellow Insight co-founder Sidney Knafel have paid an undisclosed amount for a controlling interest in Pittsburgh-based Penthera Partners. Willner be CEO and Knafel will be Penthera’s vice chairman. The software firm has developed a patented engine that moves HD video between Internet servers and digital devices including smartphones, tablets and IP-enabled set-top boxes. It’s also developing applications for cable companies. “Our transition to a new-media technology company, which is focused on next-generation consumer experiences, is the next logical step for us,” Willner says.
Google To Become Mobile Handset Power With $12.5B Deal For Motorola Mobility
We can only imagine the look on Time Warner Cable CEO Glenn Britt’s face when he learned that Google agreed to pay $12.5B for Motorola Mobility. But I doubt it was a smile. The Google news didn’t simply bury TWC’s announcement today that it will pay $3B to buy Insight Communications, which includes 750,000 cable customers many of whom live in rural areas in Kentucky, Indiana, and Ohio. Executives at the highest levels of the business say that Britt reaffirmed his commitment to cable just as Google raised new questions about the prospects for pay TV. The Web giant is about to become a major force in the industry: Motorola Mobility and Cisco are pretty much a duopoly as suppliers of cable set top boxes and the software that operators use to serve them. And Google very much wants to mix Web video with traditional cable channels — a thought that petrifies many operators and programmers. The company is trying to blend the distribution channels in its Google TV service, which has mostly left consumers cold. But that could change. Credit Suisse analyst Spencer Wang says that Google has “a significant opportunity” to capitalize “not only (on) its Google TV platform, but also its ownership of YouTube.” No wonder Matthew Polka of the American Cable Association, a trade group that mostly serves small pay TV companies, says his members “will want assurances from Google that it is both committed to the cable business model and won’t use its market power to run roughshod over smaller cable operators.”
Time Warner Cable had been considered a logical buyer: It has systems near Insight’s, the No. 9 operator with 750,000 subscribers in Kentucky, Indiana, and Ohio. But the price was a sticking point. Based on Cablevision’s agreement last year to pay $1.37B for Bresnan Communications, Insight put itself up for auction in March hoping for as much as $4B. The company had taken on a lot of debt when The Carlyle Group took it private in 2005. But Insight has been struggling lately. It lost 4.4% of its cable TV customers in the year that ended in June. Several analysts who follow TWC say they like the terms: Credit Suisse’s Stefan Anninger calls the price, which includes debt, “not cheap, but not terribly expensive either.” And Wells Fargo Securities’ Marci Ryvicker says that “Insight is one way for TWC to improve operations and show growth, which has lagged its peers.” Here’s the release announcing the deal:
Time Warner Cable reportedly is looking to buy Insight Communications, the nation’s ninth-largest cable operator, for about $3 billion. Bloomberg says that the deal — which is in the advanced stages of negotiations, according to sources, and could be announced as soon as tomorrow — would be the cable giant’s biggest since the nation’s No. 2 cabler (behind Comcast) was spun off from Time Warner in 2009. The acquisition would make sense for TWC, which despite its stellar second quarter financially is losing subscribers in its core pay TV business, dropping 130,000 subs in that service during 2Q. Those numbers would get a boost with Insight and its 679,700 basic cable customers in Kentucky, Indiana, and Ohio. Carlyle Group took the lead in taking Insight private in 2005; last year, Crestview Partners and MidOcean Partners took stakes.