Altice To Commence Cost Cutting At Cablevision

Altice NV, which completed its acquisition of

Cablevision Systems Corporation (NYSE: CVC), is aggressively cutting costs to make the deal work, according to a report on the Wall Street Journal.

Altice plans to save $900 million in costs at Cablevision, including slashing programming costs as channel contracts come up for renewal. The closure of Cablevision acquisition, which represents an enterprise value of $17.7 billion, came six months after its $9.1 billion acquisition, including debt, of Suddenlink.

The Journal said, "[I]nvestors questioned the effectiveness of Altice's strategy and its debt burden, which is forecast to increase to just above $50 billion by the end of this year." The Cablevision deal is to be financed with $14.5 billion of new and existing debt at Cablevision.

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"While its cost-cutting has helped boost the bottom line, Altice has yet to prove that it can deliver sales growth," the report said.

So, the watchword for Altice is cost cuts. The Journal said, "At Suddenlink, Altice created an authoritarian investment committee that scrutinizes every expense in hours long meetings each week, as it does with all of its takeovers and will do with Cablevision. The goal is to use Altice's global clout to negotiate better deals with suppliers."

As part of its actions, Cablevision will close Freewheel, the Wi-Fi mobile service it launched last year. Altice executives will also "focus on channel-carriage costs, which have ballooned in recent years."

"We have about half of our programming lineup that's up for renewal very soon," the Journal reported, quoting Altice USA Chief Executive Dexter Goei. "There are clearly a lot of channels that we'd like to get rid of."

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