Private equity firm TPG Capital says this morning that it has agreed to pay $1.6 billion for RCN Telecom Services and $650 million for Grande Communications Networks and plans to meld them into a top ten U.S. cable company.
But the companies didn’t announce the most interesting part of the deal: Google Capital is taking a minority stake, The Wall Street Journal reports citing “people familiar with the matter.”
That could be important because Google wants to pressure cable companies to offer speedy broadband services. It has deemed its Google Fiber initiatives in six communities to be uneconomical.
TPG says it expects its new cable deals to close by the end of March. Both companies are overbuilders, meaning they compete in their communities with larger cable and phone providers.
The investment firm is working with Patriot Media, which manages RCN and Grande. Their markets include Austin, Boston, Chicago, Dallas, Lehigh Valley, New York, Pennsylvania, San Antonio, and Washington, DC.
There’s “an overwhelming demand for affordable, high-speed cable networks,” TPG partner David Trujillo says. “There is an unprecedented amount of diverse, creative content being produced that is extremely bandwidth intensive…High-speed data has become, and will remain, the essential connection for both consumers and businesses. Both RCN and Grande are proven leaders in providing fast, affordable, and reliable data services.”
The companies say that Patriot will make “significant investments” in its networks to expand the number of homes receiving Gigabit per second broadband service.
TPG is a familiar name in media and entertainment. It’s made investments in companies including CAA, Cirque du Soleil, Lynda.com, Spotify, STX, and Univision.