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Cox, Gannett ink $2.7B deal
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July 27, 1999: 5:11 p.m. ET
Cox to get 522,000 subscribers in latest deal in cable TV industry
By Staff Writer Jamey Keaten
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NEW YORK (CNNfn) - Cox Communications Inc. agreed Tuesday to buy the cable operations of publisher Gannett Co. for $2.7 billion in its third large acquisition of cable assets this year.
Gannett's sale of its Multimedia Cablevision subsidiary, which had been expected, will give Cox 522,000 new subscribers in Kansas, North Carolina and Oklahoma, augmenting Cox's cable holdings in the central United States. Along with other recently announced deals, it would make Atlanta-based Cox the nation's No. 4 cable operator.
Cox (COX), which already offers cable service in Oklahoma, said it will have 6 million cable customers in 18 states after the purchase from Gannett, which publishes USA Today and other newspapers, and the other deals are completed.
"Gannett's cable properties are a natural fit with our growth strategy of adding large technologically advanced properties in stand-alone markets and in markets contiguous to our existing operations" Cox Communications President Jim Robbins said in a statement.
Gannett (GCI), the nation's biggest newspaper chain measured by revenue, plans to focus on its television broadcasting and newspaper operations. Arlington, Va.-based Gannett did not say how proceeds from the sale would be used.
The cable properties that Cox will get from Gannett are considered "multimedia" assets since they can provide high-speed delivery of data, voice and video services such as interactive TV and Internet access, industry analysts said.
As the list of big cable properties that are for sale continues to shrink, one analyst said the swaps like the one announced last spring by Cox and AT&T are likely to become more common as companies seek to build regional holdings.
"We're moving from the phase of consolidation to the phase of swapping," said Tom Eagan, a cable industry analyst at Paine Webber. He said the new rush will be to assemble "clusters" of cable property.
The latest cable industry deal
In May, Cox agreed to buy Texas-based TCA Cable for $4 billion, adding 883,000 subscribers. And earlier this month, Cox inked a swap of a half-million customers with AT&T (T).
AT&T, the nation's biggest long-distance phone company, has been the most aggressive buyer of cable assets as well. The company inked a $58 billion deal to buy of MediaOne Group in May, just months after completing its $48 billion purchase of Tele-Communications Inc.
The Cox purchase of the Gannett cable assets underscores how the rush to consolidate is now drawing heftier premiums. Cox is paying about $5,200 per cable subscriber, compared to AT&T's $4,600-per-customer price in the MediaOne deal.
Making their own deals in the recent cable rush have been No. 3 cable operator Comcast (CMCSA) and Charter Communications, the cable business of Microsoft co-founder Paul Allen.
Washington Post (WPO), another newspaper publisher, also is looking to sell its cable properties in the southern United States, analysts said. Gannett's sale to Cox may put Charter Communications atop the list of potential buyers for the Post's properties, the analysts said.
The recent slew of deals would leave CNNfn parent Time Warner (TWX) as the No. 2 cable operator with 12 million subscribers, behind AT&T, with about 25 million subscribers.
Cox stock fell 13/16 to 38 while Gannett added 1-7/8 to 76-3/8. 
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