Page 64 - Forbes - USA (March 2018)

Th e World’ s billio na ir e s | T EC H D ISR U PTOR S

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ROccO OMMISSO ing, took Mediacom public on Nasdaq at a $2.5 billion valua-
tion in February 2000, just weeks before the dot-com collapse.
nation,” he says. “I’ll never forget the guy from Kuhn Loeb tell- In all, he raised $380 million to pay down debt, and his Class
ing me, ‘Rocco, you know what your problem is? You’re neither B shares allowed him to retain majority voting control. “No-

Jewish nor Irish. The Italians haven’t arrived on Wall Street.’ ” body could kick me out,” he says.
So Commisso took a commercial banking job at Chase The following July, Mediacom made its largest acquisition

Manhattan Bank (now part of JPMorgan Chase). He later ever. After AT&T became strapped for cash, it put some of its

moved on to the Royal Bank of Canada, where he led lend- cable assets on the market. Commisso snatched up properties
ing to media and communications businesses. “I got attract- in Georgia, Iowa and Missouri for $2.2 billion.
ed in banking to these types of guys and ladies,” he says. “We By late 2002, compa-

used to call them ‘the cowboys.’ The cable cowboys. Because ny debt had exploded to $3

they dressed differently than everybody, they talked differently The billion. The banks wouldn’t

than everybody—and they were entrepreneurs.” question lend another dime, and

In 1986 Commisso left banking to join one such cowboy— Commisso was forced to
Alan Gerry, the founder of Cablevision—in Liberty, New York, now is end his buying binge. “What
a 50-minute drive from Mediacom’s headquarters. Commisso when saved us was not doing the
spent almost a decade as Gerry’s finance chief. “He’s one of the next deal,” he says. “It was a

brightest guys I’ve ever known,” says Gerry, now 89 years old. Commisso great decision to buy when
After the new regulations hit the industry in 1992, Gerry will lock in we did. It was an even bet-

opted out, selling Cablevision to Time Warner for more than ter decision to stop when
$3 billion in 1996. Commisso hated that decision. “This is a his gains we did.”

phenomenal time to buy as opposed to sell,” he recalls think- and walk Through shrewd balance-

ing. “And to prove it, I’m going to start my own company.” sheet management and fre-
away. quent refinancing, Mediacom

COMMISSO’S OPTIMISM WAS NOT shared by his peers. That dis- never missed a loan payment,

parity only widened in 1996 when an additional batch of regu- allowing it to stay afloat until

lations brought new competition from telecom firms, like SBC 2009, when it finally began

Communications and Ameritech, that had previously been producing enough cash to start paying down the principal debt.

barred from the cable television space. “The fear was that the Still, stockholders were not impressed. Mediacom’s share
phone companies would enter the cable business and, with price fell nearly 80% in the decade following its IPO. By 2010,
their stronger balance sheets and brand names, crush the cable Commisso decided he’d had enough of the public markets. He

companies,” says Craig Moffett, cofounder of the equity re- moved to buy the company outright.

search firm MoffettNathanson. After tense negotiations and a shareholder lawsuit, he ac-
That anxiety made it possible for Commisso to buy cable quired the business in March 2011 for roughly $600 million, a

assets on the cheap, and he went all in. He bought his first net- 64% premium. Borrowing against the company’s assets, he be-
work of cable lines, in rural Ridgecrest, California, for $18.8 came its sole owner.
million in 1996, using a loan from his old friends at Chase Again, his timing could not have been better.
Manhattan.

The risk was extreme, and to outsiders Commisso might SINCE COMMISSO TOOK Mediacom private, the company’s value
have seemed a loose cannon. He can be brash and domineer- has skyrocketed sevenfold. The question now is when Com-

ing, his Calabrian accent amplifying heated bursts of profanity. misso will lock in his gains and walk away.

But the banks trusted his background in finance. The company is an attractive acquisition prospect for larg-

After Ridgecrest, Commisso went on an acquisition spree, er firms like Altice, which has scooped up several operators in
borrowing millions—then hundreds of millions—to buy up the last several years, driving up valuations across the indus-
cable systems in Arizona, Delaware, Florida, Missouri, North try. Mediacom is the dominant broadband provider in much
Carolina, Mississippi and Alabama. He closed nine pur chases of its territory, and its new gigabit-speed service is on par with

in his first three years. “[I] was viewed as just a crazy buyer the fastest in the country. “For a large portion of their foot-
who’d buy anything that was for sale,” he says. print, they’ve got a clear product advantage over their compet-
Commisso then invested heavily in infrastructure. To date itors,” says James Ratcliffe, managing director at Evercore ISI.

he has spent $2.5 billion upgrading his networks, which has Commisso is coy about plans to sell but admits he’s taken
deterred other operators from entering his territory. Histori- multiple meetings with investment bankers in the past year.
cally, Mediacom has instead fought for subscribers against sat- A man who made his fortune on the basis of good timing, he
ellite-television firms such as DirecTV. Phone companies, de- seems to concede that his work is largely finished. “Unless I’m

spite the early panic, never posed much of a menace. here on earth just to become the biggest, the biggest, the big-

By the end of the 1990s, gloomy forecasts for the sector gest buffoon, I’m very happy with what we have accomplished,”

had softened. Commisso seized on that and, with perfect tim- he says. “I’m not Warren Buffett. I’m very content.” F

62 | FORBES MARCH 31, 2018