Precedent Cable JV Slides

Report
Citi Corporate and Investment Banking | Media
April 24, 2013
Current Cable Landscape
Perspectives on Value and Recent M&A Transactions
Strictly Private and Confidential
Table of Contents
1. Public Market Update
2. M&A Market Update
1
13
3. M&A Case Studies
a. Cablevision’s Sale of Optimum West to Charter
24
b. Cogeco’s Acquisition of Atlantic Broadband
27
c. Apollo, Oaktree and Crestview’s Sale of Charter Shares to Liberty Media
30
Citi Corporate and Investment Banking | Media
1. Public Market Update
Cable Stocks Have Outperformed
1-Year Stock Price Performance
Since 4/19/2012
Cable
40.0%
DBS
RBOC
SP50
30.3%Cable
29.4%RBOC
30.0%
20.0%
15.8%DBS
11.2%S&P500
10.0%
0.0%
(10.0%)
(20.0%)
Apr-12
Jul-12
Oct-12
Note: Cable based on volume weighted average of Cablevision, Charter, Comcast, and Time Warner Cable.
DBS based on DirecTV and Dish.
RBOC based on Verizon and AT&T.
1
Jan-13
Apr-13
Performance Drivers Differed by Operator
Drivers of 1-Year Share Price Performance
Change in:
1-Year
Shares
Forward EBITDA Forward EBITDA
Multiple
Deleveraging
Outstanding
Other(1)
Change
Estimate
$11.08
$2.52
$7.07
($1.17)
$0.71
$1.96
9.85
5.26
(5.87)
0.29
10.98
(0.81)
41.59
17.69
44.81
(14.91)
(3.65)
(2.36)
0.58
(6.75)
(0.15)
5.82
0.61
1.05
Note: Data current as of 4/19/2013.
2 (1) Other reflects changes in minority interest, non-cable assets, unconsolidated investments and preferred shares.
EBITDA Multiples Have Increased
Public cable multiples have recovered from 2008 and private market multiples have expanded.
Public and Private FV / EBITDA Multiples Over Time
Public Multiples
Private Multiples
11.4x
11.0x
10.5x
9.9x
10.2x
8.5x
10.0x
8.7x
8.5x
Cable Deal Hiatus
8.1x
8.5x
8.4x
8.0x
7.7x
7.7x
6.7x
6.7x
6.5x
5.7x
2002
3
Note:
2003
2004
2005
2006
2007
Multiples represent averages. No private cable transactions announced during 2008 – 2009.
2008
5.9x
2009
6.0x
6.0x
2010
2011
2012
Current
Public Valuations Reflect Recent Performance
Firm Value / 2013E EBITDA
Cable
DBS
Telco
Consolidated FV / ’13 EBITDA
8.7x
7.3x
6.3x
6.6x
8.1x
7.1x
6.5x
CHTR
(1)
CMCSA
(1)
TWC
6.4x
6.2x
6.1x
5.9x
(1)
CVC
5.7x
(1)
DTV
DISH
VZ
T
2013E – 2015E EBITDA CAGR
6.6%
4
4.9%
3.4%
0.1%
3.1%
6.7%
4.8%
Source: Company filings and Wall Street research.
Note: Market data as of 4/19/2013.
(1)
Represents Cable Firm Value / 2013E Cable EBITDA. CVC / Charter pro forma for sale / acquisition of Bresnan. CMCSA pro forma for acquisition of 49% stake in NBCU.
3.9%
Debt Markets Love Cable
Robust Financing Markets…
HY CCC Index
HY B Index
HY BB index
10-yr Treasury
30.0%
(%)
20 Yr Avg.
CCC
14.6%
B
10.1%
BB
8.1%
10-Yr
4.8%
9 Yr Avg
14.6
8.8
7.1
3.6
Current
8.6
5.5
4.3
1.7
Yield To
Worst
20.0%
10.0%
0.0%
'04
'05
'06
'07
'08
'09
'10
'11
'12
…That Are Highly Supportive of Cable
2010
Size
5
Coupon
8.125%
Size
$500
2012 / 2013
Coupon
5.750%
Rating
Charter
$700
BB-
M CCC
350
9.125
300
6.375
B-
Suddenlink
600
8.625
1,000
6.375
B-
'13
Large Players Focused on the Landscape
Residential
Wireless
(subscribers in millions)
0 --
20
40
CMCSA
60
80
(subscribers in millions)
100
80
100
60
40
20
Video
Data
TWC
--
T
VZ
T
DTV
S
VZ
DISH
Residential
~$ 190 bn
COX
CHTR
TP
Wireless
~$ 210 bn
CLWR
CVC
LEAP
BHN
Enterprise
~$ 100 bn
CTL
USM
Suddenlink
$40
Enterprise
(2012 Revenue, $ in millions)
$30
$20
$10
-T
6
VZ
Source: Company filing, Equity Research.
CTL
WIN
S
FTR
CMCSA
TWC
COX
CHTR
CVC Suddenlink BHN
Other
Other
Demand for Data is Primary Driver of Outperformance…
Cable is Advantaged in Reach…
(US Household Fiber / Cable Coverage, HH in mm)
#FiOS
HH
#U-Verse
HH
Fiber % US
HH Passed
97%
97%
96%
Cable % US HH
Passed
120%
97%
Cable Homes
100%
Passed:
97% of HHs
50
47
80%
38
60%
33%
17
43%
40%
Telco Homes
40%
Passed:
43% HHs
5%
20%
0%
2007
2009
2011
2012
Initial Telco Fiber
Rollout Complete
…And HSD Technology
(Download Speed in Mbps)
Cable offers a superior product
across 54% of its homes
passed
42
23
9
Fiber
7
Cable
LTE
6
5
WiMax
DSL
…Commercial Opportunity is a Secondary Driver…
Enterprise: A $100 billion Market Opportunity…
(Revenue Market Share)
37%
25%
18%
10%
5%
AT&T
Verizon
Centurylink
5%
Windstream
Cable
Other
Cable
Other
Cable Operators Plan to Expand Capabilities to Drive Market Share Gains
(2012E Enterprise Revenue, $ in bn)
$40
Estimated
Opportunity:
$20bn
Estimated
Opportunity:
$25bn
$37.0
$30
$25.0
Acquired Navisite, an
enterprise hosting
provider
Acquired a CLEC and
VoIP provider
Estimated
Opportunity:
~$9bn
in Tier 2/ 3 Cities
Provides services in
the New York metro
area through
Optimum Lightpath
Recently acquired
cloud
communications
provider Telovations
$20
$10.0
$10.0
$10
$5.0
$4.4
$3.8
$2.3
$1.9
$1.2
$0.7
$0.3
$0.3
$0.3
TWC
COX
CHTR
CVC
Suddenlink
BHN
-T
8
VZ
CTL
WIN
S
FTR
CMCSA
Other
Other
…Both Contributing to Revenue Growth
Revenue Growth Contribution
2011A – 2012A Growth in Revenue & Segment Growth Contribution
Video
Data
Commercial
Other
$2,378
20.1%
$1,711
25.8%
19.7%
25.2%
33.7%
$300
9.3%
35.9%
20.5%
Comcast
9
19.2%
TWC
38.0%
52.7%
Charter
Growth Profiles Enhanced by “Catch-up” Opportunity
Cable Penetration
% of Homes Passed; as of 12/31/12
57.7%
46.0%
CVC
41.4%
41.3%
39.8%
35.8%
34.3%
COX
CMCSA
TWC
Suddenlink
Mediacom
CHTR
46.4%
36.4%
38.7%
33.9%
32.7%
33.7%
HSD Penetration (% of HP)
53.3%
PSU Growth
2012A
6.5%
3.2%
3.0%
1.6%
0.5%
(0.3%)
(1.8%)
CVC
10
COX
CMCSA
TWC
Suddenlink
Mediacom
CHTR
Investors Focused on Costs
Programming Costs Increasing Faster than ARPU…
Primarily Driven by Sports Rights & Retrans Fees
% Growth
(Affiliate Fees: ’09A – ’15E) ($bn)
Sports
Retrans
’12 – ’15
CAGR
Cable Nets
8.2%
8.3%
8.2%
8.2%
9.2%
7.9%
7.4%
$45.8
’09 – ’12
CAGR
8.7%
$35.2
$22.3
6.8%
4.1%
$27.4
4.0%
3.5%
3.6%
7.2%
3.2%
$18.3
3.0%
23.7%
$14.9
27.8%
$3.0
$1.6
$0.8
2010
2011
2012
2013E
2014E
10.3%
2015E
9.1%
APRU
Prog. Cost / Sub
$20.5
$15.3
$11.8
Video Gross Profit Margin
62%
60%
11 Source: Wall Street research.
58%
56%
54%
52%
2009
2012
2015
Programming Costs Pressuring Margins
Change in Programming Cost / Sub
2012A vs. 2011A
11.3%
11.1%
9.3%
9.1%
8.4%
7.9%
5.4%
CVC
TWC
CHTR
Suddenlink
CMCSA
Mediacom
Cox
EBITDA Margin
2012A
41.0%
38.3%
37.4%
37.1%
36.0%
35.9%
TWC
CHTR
Suddenlink
CMCSA
(120)
(301)
(2)
34.5%
CVC-Adj
Mediacom
COX
EBITDA Margin Y-o-Y Change (bps)
(449)
12
(75)
33
(129)
Citi Corporate and Investment Banking | Media
2. M&A Market Update
Further Consolidation Likely
Current Cable Landscape
(Subscribers in 000s)
Cable
DBS
Telco
21,995
20,100
14,056
12,030
4,462
4,381
4,726
4,536
11
12
2,893
2,013
1
14
2
3
4
5
6
1,211
1,000
7
8
9
10
Three Groups of Acquirors
Acquiror Type
Motivations
 Leverage programming costs
Large Operators
 Reduce tax payments
 Operating cost reduction
Example
Charter/
Optimum West
West
 Consolidate rural systems
Roll-ups /
Platform Expansion
 Adjacent markets
Cogeco /
Atlantic Broadband
 Leverage SG&A costs
 Low risk investment
Financial Buyers
 Need leverage / scale
 What is exit?
15
Liberty / Charter
Wide Range of Processes
Type of
Process
Process 1
Process 2
Process 3
Process 4
Process 5
Broad Auction
Limited Auction
Broad Auction
Bilateral
Negotiation
Limited Auction
Sponsor nearing
Not aligned with
Catalyst for Sponsor nearing
end of investment Sponsor nearing
Company’s core
Process
end of investment
end of investment
markets
Death of founder
16
Focus parent’s
business
Prior
Processes
3
0
0
0
0
Total
Number of
Parties
Involved
7+
Did not sell
12+
2
6
Scale is Increasingly Valuable to Operators
2012A Capex per Subscriber
2012A Programming Cost per Subscriber
$450
$44.00
$42.00
$350
Programming Costs
($ per sub per month)
Capex Per Subscriber
$400
(1)
(1)
$300
Largest firm
pays ~20% less
than smallest
firms
$40.00
(1)
$38.00
(1)
$36.00
$34.00
$250
$32.00
$200
$30.00
0
5
10
15
20
Subscribers (mm)
17 (1) Based on regression curve including CMCSA, CHTR, CVC, TWC DTV and DISH.
25
0
5
10
15
Subscribers (mm)
20
25
Synergies Have Been Meaningful
Precedent Transaction Synergies
Target:
Optimum West
Atlantic Broadband
OneLink
Insight
Cogeco
Liberty Global
TWC
West
Acquiror:
Charter
Cost Synergies
Programming
--
--
% of Programming
Overhead
% of Overhead
Operating
$7
--
51.4%
--
--
% of Operating
$1
$30
2.1%
11.4%
$2
$35
39.9%
39.6%
$15
$35
25.7%
10.1%
(1)
Other
--
--
Total Costs
$7
$19
$18
$100
% of Total
2.0%
9.5%
14.6%
14.3%
Source: Company filings, Wall Street research.
(1)
Represents tax shield of incremental interest cost.
18
$19
Synergy Potential Will Drive View of Value
Large Strategic
Revenue
Cost Structure
 Penetration?
Financial Sponsors
 None
% Synergy
% Synergy
% Synergy
Programming
20%
5%
0%
Field Costs
10%
5%
0%
Marketing
15%
10%
5%
0%
0%
0%
50%
25%
15%
5%
2.5%
0%
10 – 15%
5 – 10%
1 – 2.5%
Customer Service
Corporate Overhead
Other Operating Costs
Total Synergies
19
 Some
Mid-Sized Strategic
Tax Assets Can Be Valuable
Larger Operators Looking to Reduce Taxable Income
(2013E Taxable Income)
($ in millions)
Comcast
2013E Taxable Income
Existing NOL assets
TWC
Cox
Cablevision
$10,047
$3,493
$2,000
$45
158
322
250
--
Value of A Tax Step-up Can Be Attractive
Illustrative $750mm Tax Step-up Example
Net Present Value of Tax Benefits
Transaction Sum m ary & Asset Write-Up
Transaction Value
$1,000
Tax Asset Basis
$0
Asset Write-Up
$1,000
Intangibles
80%
$800
Tangibles
20%
$200
($ in millions)
#
Intangibles -- 15yr Straight-Line
#
Fiscal Year Ending Decem ber 31,
2014
2015
2016
2017
2018
$53
$53
$53
$53
Tangible Assets -- 7yr MACRs Schedule
29
14.3%
49
24.5%
35
17.5%
25
12.5%
Total Increm ental D&A
$82
$102
$88
$78
$71
$0
33
41
35
31
28
0
Tax Savings @ 40.0%
#
Cost of Capital
7.0%
NPV
20 (1) Based on regression curve including CMCSA, CHTR, CVC, TWC DTV and DISH.
$250
7.5%
$243
8.0%
$237
8.5%
$231
9.0%
$226
$53
2028
18
8.9%
Potential Fully
Utilized Value
of Tax Step-up
$0
0
0.0%
Seller and Buyer Have Different Perspectives
TWC A
Transaction
CVC B
Transaction
$3,000
$1,365
$150
--
$3,150
$1,365
$382
$179
Insight
Seller's View
Announced Purchase Price /
Cash to Sellers
Cost Assumed by Buyer (1)
Adjusted Purchase Price
Disclosed EBITDA
Performance Adjustment
Programming Dis-synergies
Adjusted EBITDA
--
--
(15)
$164
8.5x
Buyer's View
Announced Purchase Price /
Cash to Sellers
8.3x
$3,000
After-tax Costs (1)
$1,365
$50
0.8x
EBITDA
PV of Synergies
Adjusted Purchase Price
Disclosed EBITDA
Revenue Synergies
Adjusted EBITDA
Buyer's EBITDA Multiple
21
(10)
$372
Seller's EBITDA Multiple
PV of Tax Asset
Bresnan
(1) Includes debt and swap breakage costs and other transaction costs.
(300)
-2.4x
EBITDA
(400)
(800)
$1,950
$965
$382
$164
--
24
$382
$188
5.1x
5.1x
Financial Sponsors Focused on Cable Sector
Numerous Sponsors Bidding On Cable Assets
What Are Sponsors Looking For?
Management
Team
 Can back existing teams
 Provide additional expertise
Platform for
Roll-ups
 Spreads costs across markets
“Catch-up”
Opportunities
 Underpenetrated “rural” systems
 Increases exit alternatives
 Chance to upgrade plant
 Need scale and an exit
Scale /
Leverageability  Leverage required to hit returns
22
Returns Dependent on Scale and Leverage
Illustrative Cable LBO
($ in millions)
Cable System EBITDA
Purchase Multiple
Purchase Price
$75
9.5x
$713
Leverage Capacity
Secured Debt Capacity
Secured Debt
Incremental Unsecured Capacity
$300
2.0x
$150
Total Debt
$450
% of Purchase Price
23
4.0x
Unsecured Debt
Implied Equity Investment
Minimum scale required for sufficient leverage
and to preserve exit opportunities
Lenders attracted to
recurring free cash flow, physical assets,
high margins
Bond market can be accessed for
additional leverage if issuance is above
~$150mm
263
37%
Market conditions have increased leverage
available to acquirors
Citi Corporate and Investment Banking | Media
3. M&A Case Studies
Citi Corporate and Investment Banking | Media
a. Cablevision’s Sale of Optimum West to Charter
West
Charter / Optimum West Transaction Overview
Overview
Process
 On February 7th, 2013, Cablevision Systems
Corporation entered into a definitive agreement to
sell Bresnan Broadband Holdings, LLC (“Optimum
West”) to Charter Communications Inc. for $1.625
billion
 Limited number of targeted participants
 13 weeks from beginning of process to signing
 Distribution of information package in first round
 Purchase price represents 10.0x Optimum West’s
LTM Adjusted Operating Cash Flow
 Optimum West serves approximately 366,000
customers in Montana, Colorado, Wyoming and
Utah
 Full diligence in second round
Implied Transaction Multiples
($ in millions, excl. per sub)
 Cablevision had acquired Bresnan in June 2010
for $1.4 billion (8.1x LTM EBITDA)
 Citi advised Cablevision on the transaction
24
Transaction Value
$1,625
Transaction Multiples
Metric
FV / Basic Subs ('000s)
304
$5,343
FV / 9/30 LTM AOCF
$163.1
10.0x
FV / 9/30 LQA AOCF
183.2
8.9
Optimum West Asset Overview
Geographic Overview
West
Key Operating Metrics
(September 30, 2012)
Montana
Havre
Kalispell
Missoula
Metric
Performance
Premises Passed
665,500
Basic Penetration
(% of Premises Passed)
45.7%
Digital Penetration
(% of Basic Subscribers)
83.3%
HSD Penetration
(% of Premises Passed)
42.9%
Voice Penetration
(% of Premises Passed)
25.4%
3-Product Bundling(1)
40.6%
% above 750 MHz
90.0%
Great Falls
Helena
Billings
Bozeman
Sheridan
Cody
Gillette
Jackson
Casper
Wyoming
L ar a m ie
Cheyenne
Grand Junction
Canon City
Cedar City
Durango
Utah
Lamar
Colorado
Optimum West Headends
Principal Competitors
Optimum West States Served
25
(1) 3-product bundling defined as the percentage of unique customers who subscribe to three of Optimum West’s core products (video, HSD, voice).
 CenturyLink
(No IPTV video offering)
 DirecTV, DISH
Optimum West Transaction Rationale
 Strong household and population growth
Attractive
Markets
 High levels of employment and stable economic base
 Significant new home construction
Strong
Competitive
Position and
Unmatched
Product Offering
Fully
Upgraded,
High Quality
Systems
Significant
Investment
and Operating
Improvements
by Cablevision
26
 Market leader in video and HSD with 45.7% and 42.9% penetration, respectively
 In the areas it serves, Optimum West is the only integrated triple-play provider in the
market (CenturyLink has limited HSD speeds (3 Mbps) and no proprietary video product)
 Carrier class plant and network with 90% two-way 750 – 860 MHz capacity
 State-of-the-art Network Operations Center, Regional Operations Center and principal
call centers all within Optimum West’s footprint
 $80 million in capital to migrate off net2phone, introduce higher HSD speeds and
connect additional headends
 Revamped sales and marketing team by adding door-to-door sales resources and
dedicating resources to SMB, bulk and Enterprise customer segments
Citi Corporate and Investment Banking | Media
b. Cogeco’s Acquisition of Atlantic Broadband
Transaction Overview
Overview
Key Terms
 On July 18th, 2012, Cogeco announced the
acquisition of Atlantic Broadband (“ABB”) for $1.36
billion in cash
 Cogeco will acquire 100% of ABB in an all-cash
deal
 Transaction valued at 8.8x forward EBITDA (8.3x
net of tax structure)
 Cogeco is a leading cable operator based in
Montreal, Canada
 Atlantic Broadband is the 14th largest cable
provider in the U.S., serving 251,000 basic cable
subscribers
 ABB was previously owned by ABRY Partners and
Oak Hill Capital Partners (acquired from Charter in
2004)
– Cogeco received incremental financing for
$660mm of the purchase price
– Cogeco funded the remaining portion of the
purchase price with cash and its own credit
facility
 Transaction closed in December 2012
Implied Transaction Multiples
($ in millions, excl. per sub data)
Transaction Value
Transaction Multiples
 Structure provides meaningful tax benefits back to
Cogeco
FV / Basic Subs (000s)
FV / LTM EBITDA
FV / 2013E EBITDA
27
$1,360
Metric
252
$5,403
$154
8.8x
164
8.3
Atlantic Broadband Asset Overview
Business Overview
Key Operating Statistics
 14th largest cable provider in the U.S.
(As of 6/30/2012)
Amount
 Technologically advanced network
Penetration
Homes Passed
515,346
--
PSUs
480,057
--
Digital Video Customers
98,434
19.1%
Total Video Customers
251,718
48.8
– DOCSIS 3.0 covers 85% of homes passed
HSI Customers
155,845
30.2
– 98% of homes passed are internet and telephone
ready and two-way connection capable
Phone Customers
72,494
14.1
– ~7,900 miles of network plant with an average
density of 65 homes per mile
– 92% of the platform fully upgraded to all digital or
operating 750MHz capacity or higher
Source: Company materials.
(1) As a percentage of homes passed.
Geographic Footprint
(As of 6/30/2012)
Atlantic Broadband
Headquarters
Quincy, MA
Western Pennsylvania
Homes Passed: 243,177
Basic Customers: 122,419
Maryland/Delaware
Homes Passed: 60,530
Basic Customers: 21,126
Aiken (South Carolina)
Homes Passed: 56,114
Basic Customers: 22,641
Note: Basic Customers include Basic Television and Digital Video customers.
28
(1)
Miami Beach
Homes Passed: 155,525
Basic Customers: 85,532
Atlantic Broadband Transaction Rationale
 7,900 miles of network with average density of 65 homers per mile
Attractive
Entry into
U.S. Markets
 Less competitive markets suggest ability to maintain pricing
High Quality
Network
Infrastructure
 92% of platform was fully upgraded to all digital or operating at 750MHz or higher
Commercial
Growth
Opportunity
 ~30% commercial revenue CAGR despite having less than 10% of market share
Provides Platform
for Future Growth
29
 Underpenetrated markets imply room for growth
 DOCSIS 3.0 covers 85% of ABB’s homes passed
 Approximately 40,000 businesses within existing network
 Platform allows Cogeco to explore other ways to deploy capital in the U.S. cable sector
 Neighboring markets facing limited competition as well
Citi Corporate and Investment Banking | Media
c. Apollo, Oaktree and Crestview’s Sale of Charter Shares to Liberty Media
Apollo, Oaktree and Crestview’s Sale of Charter Shares to Liberty Media
Overview
 On March 19, 2013, Apollo, Oaktree, and Crestview
entered into a definitive agreement with Liberty
Media to sell 26.9 million shares and 1.1 million
warrants of Charter Communications for $2.617bn
 Shares were sold for $95.50 per share, representing
a premium of 6.0% to Charter’s closing share price
on March 15th, 2013
Pro Forma Ownership
(in millions)
Shares Sold % Ownership Sold % Ownership PF
Apollo Stake
17.8
17.6%
Crestview Stake
2.2
2.2
7.4
Oaktree Stake
6.9
6.8
2.2
Total Stake Sold
26.9
0.0%
26.6%
9.6%
Share Price
$95.50
--
--
Total Proceeds (1)
$2,617
27.3%
--
@ Market
(3/15/13)
Sale Price
 Values Charter at 8.0x FV / 2013E EBITDA
Implied Valuation of Charter
 The transaction is expected to close in the first half
of the 2nd quarter of 2013
($ in millions)
Share Price
$90.09
$95.50
Implied Equity Value
$9,950
$10,584
Governance
Implied Firm Value
23,115
23,749
 Under the terms of the stockholder’s agreement,
Liberty Media has the right to name up to four
directors
Valuation
 Liberty is restricted from acquiring a stake
exceeding 35% until January 2016 and 39.99% into
perpetuity
 Citi acted as financial advisor to Apollo and Oaktree
on this transaction
30 (1) Total proceeds includes warrants.
Metric
FV / '13E EBITDA
$2,958
FV / '14E EBITDA
Multiple
7.8x
8.0x
3,243
7.1
7.3
EV / '13E FCF
432
23.0
24.5
EV / '14E FCF
769
12.9
13.8
Charter Asset Overview
Business Overview
Key Operating Stats
 Fourth largest U.S. cable operator based on homes passed
and basic video customers
 4,197,000 basic video subs (1)
 Diverse geographic footprint spread across mid-tier
metropolitan and rural areas
 Thomas Rutledge joined as CEO in Nov 2011 and has hired
other legacy Cablevision key executives
 Significant capital invested in plant upgrades
Geographic Footprint
(As of 12/31/2012)
31 (1) Includes commercial video and residential video.
 3,484,000 digital video subs
 3,917,000 high speed data subs
 1,979,000 telephone subs
 13,577,000 total RGUs
Charter Transaction Rationale
Strong Cable
Operating
Experience
Consistent with
Liberty Media
Investment
Strategy
Capital Investment
Has Been Made
32
 Investment in Charter represents a re-entry into U.S. cable market
(Sold TCI to AT&T in 1999)
 Liberty Global owns numerous international cable assets across 13 countries
 Best opportunity for re-entry for Liberty Media as large stake with governance rights
could be acquired at a modest premium
 Charter operations large enough to benefit from scale with a path to more over time
 Charter’s owners have made significant capital investments in infrastructure upgrades
 Liberty investment comes at time when Charter is primed for growth
Citi Corporate and Investment Banking | Media
Q&A
33
Citi Corporate and Investment Banking | Media
Citi Contact Information
Christina Mohr
Managing Director, Mergers & Acquisitions
 Office: 1 (212) 816-9247
 E-mail: [email protected]
Derek Van Zandt
Managing Director, Global Communications Group
 Office: 1 (212) 816-0633
 E-mail: [email protected]
34
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