Allen Considering Alternatives for Charter

Paul Allen, chairman of Charter Communications, is evaluating alternatives for the cable company including a sale, recapitalization or taking it private, according to a filing with the SEC. Allen, the billionaire investor who was a co-founder of Microsoft, controls 52% of the company and 91% of its voting power. It would cost him about $1B to buy out the remainder of the company. Other cable operators such as Time Warner Cable previously have expressed interest in Charter, which has more than 5.6M subscribers. CEO Neil Smit has said the company is a buyer not a seller. The pool of available cable companies is shrinking; Cablevision Systems is being taken private and Cox Communications isn't for sale. Charter is highly leveraged with $19.6B in long-term debt and $81M in cash, and a recapitalization or restructuring could reduce that leverage. Other options on the table are a reorganization or sales of material assets, the filing indicated. Analysts, however, were skeptical any move was imminent given the turmoil in credit markets and the company's improving performance. "Charter should and will be acquired eventually, I just don't find the reference in the SEC filing as groundbreaking information. Charter is always looking at strategic alternatives," said one analyst. A representative for Allen wasn't available for comment, and a Charter spokeswoman declined to comment.

Sources: SEC filing, Wall Street Journal, Reuters, Bloomberg
Commentary: Charter: Paul Allen Mulls Alternatives, Again • Charter Communications: Paul Allen May Pursue Restructuring Transactions • Nine Cable TV Stocks Worth Watching
Stocks/ETFs to watch: CHTR, TWC. Competitors: CMCSA, VIA, LBTYA, CVC

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