This article is for anyone who has any doubts if we're in the right boat:
Microsoft's Paul Allen Pays $4.4B for No. 12 Cable Operator
AOL Investment Snapshot (tm): CHTD
By John Dempsey
Reuters/Variety
NEW YORK (July 30) - Billionaire investor Paul Allen has laid out $4.4 billion in cash to buy the nation's 12th-largest cable operator, Charter Communications.
This deal comes less than four months after Allen made his first foray into cable-system ownership, a $2.8 billion buyout of Marcus Cable, at the time the 10th-largest cable operator.
The merging of Marcus and Charter will create the seventh-biggest operator, with a total subscriber count of 2.4 million, said Michael Yagemann, senior managing director of Nationsbanc Montgomery Securities and an adviser to Allen.
Allen doesn't expect to stop at being only the seventh-largest, Yagemann said, adding that Allen has become convinced cable will end up eclipsing all other forms of delivery for such services as high-speed modems, Internet access and even telephony.
One cable company Allen has his eyes on is Century Communications, a top-10 multisystem operator that serves more than 1.3 million subscribers and, like Charter, has a major presence in Los Angeles.
Charter, headquartered in St. Louis, has its largest cable system in that city, with close to 165,000 subscribers. It has cable systems scattered throughout 19 states.
The $4.4 billion pricetag for Charter includes Allen's agreement to assume Charter's $2.2 billion in debt.
Yagemann says Allen is in effect paying $3,700 for each Charter subscriber, which, at 14 times projected 1999 cash flow, is one of the highest prices ever ponied up for a cable operator.
Allen's commitment reinforces the perception that -- after a number of years in the doldrums -- cable has re-emerged as a darling of Wall Street.
Allen is also investing in showbiz content, having bought a majority stake in Barry Diller's HSN -- which includes TV series (''Law & Order,'' ''Xena: Warrior Princess'' and ''The Jerry Springer Show,'' among others) and the USA Network and Sci-Fi Channel -- and a 24 percent piece of DreamWorks.
Reuters/Variety
07:43 07-30-98
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