DigitalBridge, Crestview make a play for WideOpenWest

WideOpenWest is, once again, in play.

WideOpenWest confirmed Friday that it has received an unsolicited, non-bundling preliminary proposal from DigitalBridge Investments and "various" Crestview entities to purchase all of the outstanding shares of WOW that Crestview does not own for $4.80 per share.

WOW said its board intends to establish a special committee of independent directors to evaluate the proposal from DigitalBridge and Crestview.

WOW shares surged on the announcement – they were up $1.20 (+31.87% each) to $4.99 each in Friday midday trading.

Crestview, WOW's largest shareholder, owns about 38% of WOW.

DigitalBridge is an investment firm focused on a handful of verticals, including data centers, cell towers, fiber networks, small cells and edge infrastructure. It manages an $80 billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders. Companies in DigitalBridge's portfolio include AtlasEdge, Boingo and Zayo, among others. In March, Vertical Bridge (the cell tower division of DigitalBridge) struck a deal to acquire about 220 cell towers from Shentel for $310.3 million.

"We believe that our proposal represents a highly attractive value for the Company's shareholders relative to recent trading," DigitalBridge and the aforementioned Crestview affiliates explained in a May 2 letter to the WOW board of directors. "The $4.80 per share price represents a 32% premium over WOW's closing price as of May 1, 2024 and 44% premium to the Company's 60-day VWAP [volume-weighted average price]."

DigitalBridge's interest in WOW could be considered a surprise given that the company has largely avoided striking residential-focused fiber deals due in part to the threat of overbuilders. About a year ago, DigitalBridge CEO Marc Ganzi predicted there was "pain coming" to the residential fiber market.

More bidders could emerge

Some industry watchers believe the unsolicited offer for WOW could spur more action.

"We think it's possible that other bidders potentially emerge," KeyBanc analyst Brandon Nispel said in a research note issued today.

The take-out offer from DigitalBridge and Crestview entities enters the picture a couple of years after a report that Morgan Stanley Infrastructure Partners was in exclusive talks to acquire Colorado-based WOW. That followed an earlier report that WOW was exploring strategic options, including a sale.

The speculation surrounding WOW in 2022 arrived nearly a year after WOW sold off a handful of cable systems for a combined $1.8 billion – it sold its Cleveland and Columbus, Ohio, systems to Atlantic Broadband (now Breezeline), and its Chicago; Evansville, Indiana; and Anne Arundel, Maryland, systems to Astound Broadband. WOW currently runs networks passing nearly 2 million customers in parts of Michigan, Alabama, Tennessee, South Carolina, Georgia and Florida.

In the wake of those deals, WOW embarked on a strategy to build fiber-to-the-premises (FTTP) networks in non-adjacent greenfield areas that had limited broadband competition, including portions of central Florida and Greenville County, South Carolina.

During this time, WOW has also moved ahead with a plan to phase out its own pay-TV services in favor of migrating customers to YouTube TV, and launched a mobile service in partnership with Reach.

WideOpenWest execs are scheduled to discuss Q1 2024 results the morning of Tuesday, May 7.