Patrick Drahi, a French-Israeli billionaire who also holds several more passports, is a known entity in Israel – he owns the country's HOT cable company and the internet news station i24, which broadcasts from Jaffa port.
He has figured high in the ranking of Israeli billionaires ever since he immigrated to Israel and received citizenship, and his capital is assessed at $7.5 billion according to the last ranking of the 500 richest Israelis by TheMarker. But in both Israel and France details about his life, businesses and permanent home are scant, and purposefully so: Drahi does all he can to maintain privacy and stay under the radar.
This was true until recently, when a group of Russian hackers broke into the servers of the Altice Group, which Drahi owns and uses to conduct most of his business, extracting millions of documents related to him and his companies.
After an extortion attempt, the hackers published the documents online, where French media and news outlets Reflets, Blast and StreetPress accessed the documents and discovered the findings – while facing lawsuits filed by Drahi and Altice.
What were the contents of these documents, called in France “Drahi-leaks”? According to investigations by the media outlets, Drahi, 59, was born in Morocco and holds French, Israeli, Portuguese, Moroccan and Caribbean (from the island of Saint Kitts and Nevis) passports. His permanent dwelling is in Switzerland, where he pays his taxes.
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Drahi owns a private plane and houses in London, New York, Geneva, the skiing town of Zermatt, the Caribbeans and Israel. His business in Israel is a drop in his gigantic empire. He holds, through Altice, the second-largest telecommunications company in France, SFR, a leading communications network in Portugal, and through Altice U.S., the largest unit in his empire, which is traded on the American stock exchange, a cable and communications company that provides TV channels, internet and phone services to millions of customers in dozens of states.
Drahi is married to a woman of Greek-Syrian origins, with whom he has four children, some of whom work in companies belonging to his group. They are considered potential successors as managers of the group.
The exposers of Drahi-leaks sued
The information in the documents that particularly excited the French relates to ties with prominent French figures and organizations. They ostensibly indicate that in the past Drahi paid the famous French journalist Jean Jacques Bourdin for “consulting” and paid or donated to prominent and influential public figures in France such as philosopher Bernard-Henri Levy and economist-consultant Jacques Attali.
In France the discussion of the Drahi leaks affair mostly ceased to focus on the information itself, and spilled over into a preoccupation with Drahi’s decision to file a lawsuit for slander against Reflets for the information taken from Altice's computers. The companies that published the documents hold that the billionaire restricted the public’s right to know.
Some of the published information is noticeably personal. Drahi’s instructions to the service staff in vacation homes on how to dress, how to communicate with family members during their vacations and how to serve the food, for example, or descriptions of him as a “skinflint” who “is all-seeing” but also a “financial genius.”
Additional information relates to the value of his art collection – in 2019 Drahi acquired the U.S. public auction house Sotheby’s for $3.7 billion – and what appears to be the transfer of works of art to tax havens in order to save on payments mandated by French tax regulations.
The documents also reveal business information, including Drahi’s attempts to issue the internet startup Teads at a valuation of billions of dollars after acquiring it for a sum of a few hundreds of millions of dollars, an attempt that proved ultimately unsuccessful.
When interest rates increase, stability is eroded
But the French media largely minimized one thing, which does not appear in the stolen documents: the financial position of Drahi and the companies he controls, and in particular Altice USA (ATUS). Drahi’s parent company, Altice, which is registered in Luxembourg and holds European assets, is a private company, but the shares of the public company Altice USA, which was created after Drahi acquired Cablevision from its owners in 2015, fell in the past year by no less than 74% and reflect a market value of only about $2 billion – a low sum for a large media company with annual revenues of about $10 billion according to its reports for 2021.
Why? The answer is leverage. Drahi is a financier who often buys and sells companies using large amounts of credit, and when the interest rate increases after a decade of very low interest rates, the financial stability of leveraged companies, including companies like Altice, is eroded, and the market identifies this. In the case of Altice, according to the report for the end of 2021, the company’s debts totaled $24.2 billion, and despite a slight decline in debt thanks to the profits created by the company, it is now being made to raise a debt at higher interest rates.
Two weeks ago, on December 15, for example, a subsidiary of Altice USA raised a debt of about $2 billion, which is replacing a previous debt, at an interest rate of 5.3%, for a period of about six years. Is that a lot? Altice is now carrying out an expensive deployment of optic fibers in the regions where it operates, it has large debts and many expenses, and the issue of leverage and the competition in the optic fiber market has an adverse effect on the share price – which only a week ago was at a level of only $3.8, the lowest since the company was established in its present format.
As the headlines in the Israeli business press also make clear, the present period of rising interest rate is challenging many companies – and especially leveraged companies in the fields of real estate and the media – and forcing them to improve their capital structure by selling assets, among other things.
As he demonstrated when he chose to sue those in France who published the leaked documents, Drahi was certainly harmed by the publication of personal details, but we can reasonably assume that like other tycoons, at the moment he is more concerned with the financial stability of his companies in light of the decline in the value of his assets due to the declines in the stock markets, and the increase in his financing expenditures due to interest rate hikes.