From today's WSJ:
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July 30, 1998
Paul Allen Sets Deal to Acquire
Cable Concern for $4.5 Billion
An INTERACTIVE JOURNAL News Roundup
Paul Allen, just months after his first foray into cable television, announced
a huge deal to acquire another cable operator, Charter Communications,
for $4.5 billion.
With Thursday's deal, the billionaire investor and Microsoft Corp.
cofounder adds Charter to his initial cable holding, Marcus Cable, which
he agreed to acquire in April for $2.78 billion.
Closely held Charter, based in St. Louis, has more than 1.2 million
customers in 19 states.
In investing in the two cable concerns, Mr. Allen is signaling his conviction
that it's the cable infrastructure that will most quickly deliver interactive
services -- including educational materials, Internet access, entertainment
and sports content -- to consumers.
Mr. Allen, who left Microsoft's management in 1983, is betting that a huge
market will emerge for lightning-fast transmission of data, video and other
interactive services, using a wide array of sophisticated networks and
delivery devices.
He already has made a series of investments to support that bet, including
a 4.3% stake in St. Paul, Minn.-based U.S. Satellite Broadcast Co., which
is valued at $80 million. And he has a 49.5% stake in Los Gatos, Calif.,
wireless-data-networking company Metricom Inc.
Mr. Allen, whose personal fortune is valued at $20 billion, has become a
big believer in the use of cable modems to deliver data at high speeds to
homes. He is less confident about the speedy arrival of alternatives such as
digital subscriber lines, or DSL, which the telephone companies hope will
be big money makers.
In a press release Thursday, Mr. Allen said Jeffrey A. Marcus, the founder
of Marcus Cable, will serve as chairman of the combined company, which
will be the nation's seventh-largest cable operator serving 2.4 million
customers. Charter chief executive Jerald L. Kent will become the chief
executive of the combined organization.
The combined company, which has not yet been named, will consolidate
its executive offices in St. Louis, while retaining a presence in Dallas.
The acquisition is expected to close by the end of the year, pending
franchise and government approval.
Gaylord Entertainment Co. expects to receive an estimated $370 million as
a result of the acquisition, including $240 million in prepayment of
Gaylord's 10-year promissory note from Charter and $130 million for
certain contractual participation rights held by Gaylord.
Gaylord expects to record a gain of $95 million, or $2.85 a share, from
the transaction.
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Chip |
