The Somerset-based company went for approximately $483 million — or $6,000 per subscriber.
By: Lauren Otis
Comcast Corp.’s recently announced deal to acquire Princeton-area cable systems provider Patriot Media & Communications will not alter consumers’ cable services in the near term, but it’s too early to tell what service changes may occur in the future.
In a deal announced Tuesday, Philadelphia-based cable giant Comcast agreed to acquire Somerset-based Patriot Media for a net cash investment of approximately $483 million. Patriot Media serves approximately 81,000 video subscribers in central and northern New Jersey, including Princeton, Montgomery and Rocky Hill.
Privately held Patriot Media was founded in 2002 and in 2003 acquired its New Jersey cable systems from RCN Corp. for $245 million.
"I am very comfortable and excited to be able to sell to Comcast," said Steve Simmons, Patriot Media co-founder, chairman and chief executive officer. Mr. Simmons said he will not continue with the company after the sale, which is expected to close in the third quarter of 2007.
"I think for the customers in Princeton and central New Jersey I would expect they will add additional products," said Mr. Simmons of what area cable subscribers can anticipate from the ownership change. "I expect they will do what we do and then some," he added.
"Patriot Media customers will not see any immediate changes to their existing products, customer service contact, billing or any other area," said Comcast spokesman Fred DeAndrea. Mr. DeAndrea said it was premature to comment on what, if any, changes might be made after a sale until the sale was concluded.
"It’s a nice tack-on acquisition with a fair amount of synergies," said Todd Mitchell, a satellite and cable industry analyst with Kaufman Bros. in New York City. "Strategically, it plugs a hole right in the middle of their (Comcast’s) New Jersey footprint," Mr. Mitchell said.
The purchase price breaks down to approximately $6,000 per Patriot Media subscriber, significantly higher than Comcast’s average valuation of $3,900 per subscriber, Mr. Mitchell said. At this price the deal still makes sense for several reasons, the affluence of the subscribers acquired, the good shape of Patriot Media’s cable "plant" the wires and connectors used to tie the network together and the high relative penetration Patriot Media has achieved in offering subscribers advanced services such as high-speed data transmission, bundled digital video recording and others, Mr. Mitchell said.
The wealth of the communities Patriot Media serves makes its subscribers worthy of a purchase premium, said Todd Chanko, a television and film industry analyst with JupiterResearch in New York City. "You are talking about Princeton, N.J., which is probably one of the most affluent towns in the country, right up there with Greenwich, Conn.," said Mr. Chanko.
Comcast advertisers will be interested in these high demographic subscribers, Mr. Chanko said, plus Comcast can "upsell" these wealthy subscribers on premium cable, high-definition, DVR, voice and broadband products. Such affluent subscribers are also less likely to "churn," or look for bargains and switch service providers, Mr. Chanko said. This gives Comcast an advantage in the area at a time when it is in a high-stakes competition with companies like Verizon to sell consumers "the triple play," or bundled cable TV, telephone and Internet services, he said.
Of the premium price Comcast was prepared to pay for his subscribers, Mr. Simmons said: "In some ways Comcast got a bargain, not on a customer basis but on a cash-flow multiple basis." The cash flow generated by Patriot Media subscribers "is about the highest in the U.S.," he said, with among other things "the highest high-speed data penetration in the U.S."
Additionally, Patriot Media has invested $50 million in upgrading its network, Mr. Simmons said, having rebuilt over 2,000 miles of cable TV plant.
The deal is subject to state Board of Public Utilities approval, plus some approvals from the Federal Communications Commission, Mr. Simmons said.
Staff writers Courtney Gross and Greg Forester contributed to this story.

