Billionaire Paul Allen said Thursday he’ll buy Charter Communications for $4.5 billion in his biggest single investment, and combine it with Marcus Cable to form the seventh-largest U.S. operator of cable-television systems.
Allen, a Microsoft Corp. co-founder and one of the world’s richest people, will pay about 14 times the closely held company’s 1999 projected operating cash flow, or slightly more than other cable companies have fetched recently.
Allen earlier this year bought Marcus Cable for $2.78 billion.
The combined companies will have 2.4 million subscribers, with the idea of linking them to Allen’s other businesses in media, entertainment and technology.
Allen also is trying to create a company big enough to provide profitably interactive services, such as the Internet and phone calls, via cable.
“There’s a sense that either you get bigger or you’ve got to get out,” said Theodore Henderson, a cable analyst at Janco Partners Inc. “He needs to get bigger. How big, nobody knows.”
The combined company, as yet unnamed, will consolidate its executive offices in St. Louis while retaining a presence in Dallas.
