Cox Communications Inc. said Tuesday it will buy 80% of Prime South Diversified Inc. for $1.3 billion in cash and stock, giving it more than 319,000 residential cable customers and other media businesses in the fast-growing Las Vegas market.
Under the agreement, Cox gets one of the nation's best metropolitan cable systems, analysts said, along with Prime's hotel cable service reaching 105,000 hotel rooms, home video-services units, a local telephone service and a one-third stake in Las Vegas One, a 24-hour news television channel.
Cox is paying 80% cash and the rest in stock for the stake in Prime South, a closely held company controlled by the Greenspun family, analysts said. The family also owns the Las Vegas Sun newspaper. After the transaction, the Greenspun family will own the other 20%.
The move allows Cox to further pursue its goal of clustering customers in the West, where most of its 3.3 million subscribers live.
Cable companies such as Cox have tried to focus their efforts in geographical clusters, to cut costs and improve their services.
Cox is paying a high price to bolster its presence in the region. The nation's fifth-largest cable company is paying about double the going rate for cable companies--about $4,000 per subscriber, compared with the industry norm lately of about $2,000.
Cox shares rose 50 cents to close at $46.50 on the New York Stock Exchange.