ABRY saw the cable
sector as an attractive investment opportunity early, noting that the
cable business is characterized by strong barriers to entry, highly
recurring subscription-based revenues, and significant operating
leverage. We developed deep sector knowledge while reviewing numerous
potential cable investments and made two successful investments in
Avalon Cable and Wide Open West. In looking for a third platform
company, we partnered with two highly respected cable veterans, David
Keefe and Edward Holleran and, together, acquired Atlantic Broadband in
June of 2003.
At the time of the acquisition, Atlantic
Broadband’s cable systems served 228,000 basic subscribers in Miami
Beach, Western Pennsylvania and Maryland-Delaware the vast majority
being “video-only” customers. The systems were robust and almost fully
upgraded, and were capable of offering high-speed data and other
advanced broadband services with only modest incremental capital
investment.
Post-acquisition, we worked with management to
upgrade and re-brand the cable systems, shifting the marketing focus
from the traditional video offering to the higher-growth, and more
profitable internet and voice offerings and repackaging offerings with
lower profitability with higher-demand programming. These strategies
had proven quite successful at Avalon and, particularly, Wide Open
West.
Additionally, we supported management in the
purchase of a cable system serving 20,600 basic video subscribers in
the high growth market of Aiken, SC. By applying its proven
internet-centric marketing strategy in Aiken, the Company increased its
base of internet customers by 40% in the first year of ownership alone.
Today, Atlantic Broadband is a leading provider
of entertainment, information and communications services. The
“double-play” and “triple-play” bundled offerings with cable
television, internet, and voice offerings have greatly improved the
customer value proposition and substantially increased Atlantic’s cash
flow growth, and, in the process, improved overall customer
satisfaction and retention.