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Cable television broadcasting industry

Microsoft Co-Founder Paul Allen Acquires Charter Communications for $4.5 Billion

Strategic Insights

— 1 min read

Microsoft co-founder Paul Allen's latest move in the cable industry has significant implications for the future of communications infrastructure. With the acquisition of Charter Communications, Allen is taking a major step towards creating a cable company of substantial size, serving over 2.4 million customers across the United States. The combined company will have a strong presence in major markets, from the West Coast to the Southeast, positioning itself as a major player in the provision of interactive services such as Internet access, electronic commerce, and phone calls over cable TV lines.

Key Takeaways:

  • Paul Allen is acquiring Charter Communications for $4.5 billion, creating a company big enough to profitably provide interactive services.
  • The combined company will have over 2.4 million customers and a presence in 19 states, including Georgia.
  • The acquisition is part of Allen's long-term plan to build a cable organization and is expected to close by the end of the year, pending federal approval.
  • Jeffrey Marcus, founder of Marcus Cable, will be chairman of the new company, while Charter's Chief Executive Jerald L. Kent will become CEO.
  • The combined company has not yet been named, but is expected to be a powerhouse in the cable industry.
  • Allen has a history of investing in cable-related companies, including stakes in America Online Inc., Ticketmaster Group Inc., and Metricom Inc.
  • The acquisition is likely to be part of a broader strategy to create a dominant player in the cable industry, with Allen considering the purchase of Century Communications Corp. in Los Angeles.
  • The deal underscores the emergence of cable as the communications infrastructure of the future, with Microsoft also investing in Thomson Multimedia and a manufacturer of television set-top boxes.

Statistics:

  • Charter Communications serves 2.4 million customers across 19 states.
  • The acquisition price of $4.5 billion forms the basis of a deal that will give Allen more than 90% ownership in Charter.
  • Charter has systems in 19 states, including Georgia.
  • The combined company is expected to be the No. 7 cable company in the country.

Sources:

  • The Wall Street Journal, "Microsoft Co-Founder Paul Allen Buys Charter Communications for $4.5 Billion"
  • Variety, "Microsoft's Paul Allen Eyes Century Communications Corp. Buy"
  • Associated Press, "Microsoft, Others Invest in Leading Cable Equipment Maker"

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