Cablevision Systems Corp. (NYSE: CVC) announced today that it was acquiring Bresnan Communications for $1.365 billion. Bresnan has more than 300,000 customers in Colorado, Montana, Wyoming, and Utah, and the company’s wires pass more than 630,000 homes in the four states it serves. Ascent Media Corp. (NASDAQ: ASCMA), Time Warner Cable Inc. (NYSE: TWC), Charter Communications, Suddenlink Communications, and private equity firm TPG Capital were also said to be bidders for Bresnan. Comcast Corp. (NASDAQ: CMCSA) was apparently not interested, even though it owned 30% of Bresnan.

Bresnan’s controlling interest was owned by Providence Equity Partners, which paid Comcast $525 million for the stake in 2003. Cablevision believes it can boost its income per home passed from Bresnan’s current $250 to $450.

At the same time as it announced this acquisition, Cablevision also said that the company would buy back $500 million in its shares. The company has been under pressure to return cash to shareholders rather than use cash to make acquisitions.

Because the deal for Bresnan is structured as an asset purchase rather than a stock purchase, Cablevision expects over time to offset nearly all its cash investment of less than $400 million. The bulk of the transaction, $1 billion, will come in the form of non-recourse debt.

Cablevision will be able to apply depreciation costs for Bresnan’s equipment over time to the company’s net operating losses, thereby lowering its federal tax rate. The tax savings helped the company sell the deal to some reluctant shareholders. The price values Bresnan higher than other publicly traded cable operators, but the tax break lowers the overall price that shareholders had to pay.

The deal is generally being viewed as a good one for Cablevision, which is watching its share price rice more than 5% today on more than 4x average daily volume.