More convergence: Welcome to the new industrial revolution: Glad to be a part of it.
NEW YORK (AP) _ Microsoft co-founder Paul Allen took another big step toward his goal of creating a technology and entertainment empire Wednesday with the $3.6 billion purchase of Falcon Communications, a closely held cable TV company.
The transaction, which includes cash, stock and assumed debt, will make Allen's Charter Communications the fourth-largest cable television operator in the nation with 5.5 million subscribers.
The deal was the latest in a yearlong buying spree that has vaulted the multibillionaire into the top ranks of the U.S. cable industry, which is undergoing a massive makeover as companies move toward offering phone, Internet and interactive video services over cable TV lines.
Allen had been advocating just such a system for years, and has been busy amassing an array of holdings in high-tech and entertainment firms as part of his ''Wired World'' strategy. His entry into the cable TV business a year ago was seen as a strong endorsement of that technology as a carrier of entertainment and interactive services.
Allen's other holdings include an Internet portal site called Go2Net, which offers personal finance and commerce features, and High Speed Access Corp., which provides high-speed Internet access over cable TV lines.
''Charter has a competitive edge in the access and availability of these new interactive services,'' said cable analyst Aryeh Bourkoff of CIBC World Markets. ''Given that Paul Allen has been a savvy investor in other properties, Charter customers are likely to benefit.''
Allen also owns two professional sports teams, football's Seattle Seahawks and basketball's Portland Trail Blazers, a strategy employed successfully by Cablevision of New York, which owns interests in the NBA's New York Knicks and the NHL's New York Rangers. Allen also has a stake in the DreamWorks SKG movie studio.
Allen began his cable campaign a year ago with the $2.8 billion purchase of Marcus Cable Co., which was then the nation's largest privately held cable operator. His second major purchase came last July with the $4.5 billion deal for the St. Louis-based Charter, which has become the vehicle for his other cable buys.
Allen, who often shies away from publicity, has considered a public offering of stock in his cable ventures but has so far kept them private. Thanks to his large holdings of Microsoft stock, Allen has a massive war chest of $22 billion, estimates Forbes magazine, making him the third-wealthiest American after Bill Gates and Warren Buffett.
For Falcon, the deal with Charter gives the company the financial backing and technological expertise to upgrade its cable lines, which are concentrated in California, the Pacific Northwest and the Southeast. The privately held Falcon is based in Los Angeles.
Fifty-four percent of Falcon is controlled by founder Marc B. Nathanson, who will become vice chairman of Charter. The other 46 percent of Falcon is owned by AT&T Broadband & Internet Services, which has approved the transaction.
AT&T, with its blockbuster acquisitions of TCI and MediaOne, is now the nation's leading cable company, followed by Time Warner, Comcast, and now Charter. AT&T is also hoping to provide various telecom services over cable TV lines including local phone service and high-speed Internet access. |
