Tuesday, October 19, 2004

Cox proves you can go home again. It's just REAL expensive!

Cox Enterprises announced today that it reached an agreement with its once and future wholly-owned subsidiary Cox Communications and will buy the outstanding shares of the cable company for $8.5 billion.

As the story says, the new price ($34.75) is about 8.6 percent higher than the original offer Cox made to Cox of $32 per share. The deal is expected to close by mid-December, at which point getting information about the internals of Cox Communications will become almost as difficult as getting unpleasant facts heard at a Bush/Cheney cabinet meeting.

This story has some interesting facts about the debt incurred by this deal.

For those of you keeping score at home, the higher price per share of the Cox offer to Cox is $600 million higher than the original offer of $7.9 billion. In local terms, that's the cost of five or six proposed LUS fiber to the home projects, depending on the final plan.

Put in perspective, it means that the Cox family prefers to paying off shareholders instead of investing in the future of this community. That was made clear by the original offer. The sweetened deal means that the family is at least five times more interested in unfettered control of the cable company than they are in the economic viability of this community. Or, Cox would rather spend an extra $600,000,000 buying paper than investing in fiber in Lafayette and a few other Louisiana communities where it provides cable services.

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