Charter Communications

Imagine a time when television, computers, the Internet and telecommunications converge, and the world of entertainment and information come into the home and the workplace through a single cable wire. The vision is here. We offer a full range of traditional cable television services and are launching digital cable television services, interactive video programming, and high-speed Internet access, and are exploring opportunities in telephony. All of these services will be delivered through the far-reaching digital cable network of Charter Communications. Key Dates: Charter is acquired by Microsoft Corp. cofounder, Paul Allen, for $4.5 billion. Charter goes public in November after making more than ten major acquisitions in one year. Charter Communications, Inc. was formed in January 1993 by three former executives of St. Louis-based Cencom Cable Associates, Inc. Howard Wood was the former president and chief executive officer (CEO) of Cencom; Barry Babcock was the former chief operating officer (COO) of Cencom; and Jerry Kent was Cencom's former chief financial officer (CFO). Cencom had been acquired in 1991 by Crown Media Inc., a Dallas-based subsidiary of Hallmark Cards Inc., for an estimated $1 billion. Crown subsequently made an initial investment of several hundred thousand dollars in Charter, and in turn received a 51 percent non-voting stake in the company. The decision to form Charter was precipitated by Crown's plans to move Cencom's headquarters from St. Louis to Dallas. Babcock became Charter's chairman, Kent president, and Wood was management committee chairman. At first Charter was based in Cencom's offices in west St. Louis County. The company expected to acquire cable properties and began looking around the country. It was also considering such cable-related businesses as telecommunications and video data systems. When Charter was first established, the regulatory environment for cable television was changing. Congress had just passed a new cable bill over President George Bush's veto, but the Federal Communications Commission (FCC) had not yet established all of the regulations to enforce the new legislation. Kent was named president and CEO of the new company, which combined Charter's 139 cable systems in 17 states with those of Marcus in six states. Babcock became vice-chairman, and Wood was named senior adviser. The company's headquarters remained in St. Louis. The combination of Marcus and Charter created the seventh-largest MSO in the United States, with 2.4 million customers. By the end of 1998 Jeffrey Marcus had left Charter to join Chancellor Media, and Babcock was named chairman. Two top Marcus Cable officials were also dismissed following service problems in Fort Worth and other North Texas cities that were blamed on poor management. Charter's strategy following the IPO was to launch digital cable service in its systems and offer high-speed Internet access through cable modems. At the time of the IPO Charter was heavily leveraged, with its debt level at more than seven times its annual cash flow. The company had $9.4 billion worth of acquisitions pending, including major deals for Falcon Cable TV, Fanch Communications, and Avalon Cable. Once those deals were completed in November 1999, Charter would have to invest heavily in upgrading their systems. Principal Competitors: AT & T Corp.; Time Warner Inc.; Comcast Corp.; Adelphia Communications Corp.; Cox Communications Inc.