Cable on the table

Sibs seek to take Cox private in $7.9 bil bid

By MICHAEL LEARMONTH

NEW YORK -- Cox Enterprises, a private, Atlanta-based media company owned by two elderly sisters, has launched a buyout bid for Cox Communications, hoping to take the nation's third largest cable company private.

The $7.9 billion buyout offer values Cox at $32 a share, a 16% premium over Friday's closing price of $27.58. Cox is bidding for the 38% of the company it doesn't already own.

As controlling shareholder, Cox has been frustrated with the stagnant value of its holdings, which are trading near the stock's 52-week low despite quarter after quarter of solid earnings and revenue growth.

Cox management also has grown impatient with the performance of the shares, which were downgraded Friday along with Comcast by UBS, due to near-term fears that satcasters and Baby Bells would grab market share with aggressive discounting.

Cox shares spiked more than 20% in Monday trading, with investors pushing Cox shares over $33, predicting Cox Enterprises may sweeten the deal.

Buyout offer values Cox at $3,850 per subscriber, a valuation that helped boost other cable shares including Cablevision (up 12%), Comcast (up 4%), and Charter (up 3%).

Cox Enterprises called the buyout offer "friendly" and emphasized that the current management team under CEO Jim Robbins would be asked to remain and run the privately held company.

'Vote of confidence'

"This is a vote of confidence for the company," said Cox spokesman Bob Jimenez. "We like them so much we want to own all of them."

Cox Communications said it would assemble a committee of independent board members to consider the proposal. Company had no further comment.

Analysts liked the concept of the deal. "Going private is probably the best road for Cox to take," said Rich Greenfield of Fulcrum Global Partners. Some predicted Cox would raise its offer; others say Cox could end up being sold off entirely.

The modern cable industry was built through stock-fueled acquisitions. Cox went public in 1995 in part to finance the acquisition of Times Mirror cable properties.

But today most cable households are served by one of the top five cable operators -- Comcast, Time Warner, Cox, Charter and Adelphia. Adelphia is on the auction block, but the cable business is shifting from a consolidation and high-growth phase to one in which cash flow is generated on a more predictable, some may say boring, basis.

Cox Enterprises said a private company structure better suits the company going forward as it battles satellite and telco competition and makes the kind of investments short-term investors hate.

Cox owns newspapers, television stations and a controlling stake in publicly held cable and radio companies. It was founded in 1898 by James Cox, who became a three-term governor of Ohio. Company is still owned by his two surviving daughters, Barbara Cox Anthony and Anne Cox Chambers.