ALLEN KEEPS MOVING UP CHART Rifkin and Greater Media Latest to Join Wired World

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Charter Communications, the cable vehicle of Paul Allen'sVulcan Ventures Inc. outfit, was wheeling and dealing last week, forming agreements thatshould place it among the top five cable operators in the country.

The St. Louis-based MSO announced that it had signed dealsthat will bring it more than 500,000 subscribers in the Northeast, Southeast andMidwestern regions of the country, for an estimated $2 billion. In the process, GreaterMedia Inc. will leave the cable business, and Rifkin & Associates Inc. will retain onesmall partnership.

The first deal is the largest: a $1.5 billion deal with twoaffiliates of Rifkin -- InterLink Communications LLLP and Rifkin Acquisition PartnersLLLP -- which will bring 460,000 subscribers into the Charter fold.

The second deal -- with Greater Media, an EastBrunswick, N.J.-based newspaper and radio concern -- will give Charter 173,000subscribers in northeastern and central Massachusetts for an estimated $519 million.Greater Media is also selling its Philadelphia system to Comcast Corp.

Charter did not disclose the terms of either deal. However,sources familiar with the agreement said the Rifkin purchase was valued at about 13.5times next year's cash flow, or $3,300 per subscriber. Based on the industry benchmark of$3,000 per subscriber for such deals, the Greater Media transaction would be worth roughly$519 million.

Allen paid about $3,700 per subscriber for Charter, and hisacquisition strategy slowed when some potential MSO targets, such as CenturyCommunications Corp., began asking for similar high-flying buyout numbers.

Both transactions give Charter stronger clusters in itsexisting markets. Denver-based Rifkin primarily owns midsized systems in communities nearlarger metropolitan areas. Rifkin is the largest cable operator in Tennessee, and it hassystems in 18 states, including Georgia and Illinois.

And the Greater Media deal gives Charter a strongerfoothold in New England -- an area that the company has been coveting for years.

Charter president and CEO Jerald Kent said the acquisitionwas made as part of Charter's overall clustering strategy.

"This helps us to gain critical mass," Kent said."Most of these [Rifkin] properties are predominantly in the Southeastern part of theUnited States. It's an excellent fit with what we're doing."

Kent added that many of the systems in the Rifkin deal havebeen upgraded to 750-megahertz, two-way, and they are data-activated.

Also as part of the deal, Rifkin retains a third cablepartnership -- Alliance Communications -- with about 100,000 subscribers in mostlyrural communities. However, that partnership -- which is managed by R&AManagement, another Rifkin affiliate -- could receive some assistance from Charter.

R&A will continue to be headed by vice chairman and CEOKevin Allen and Jeffrey Bennis, the company's president and chief operating officer.Charter is negotiating with R&A about possibly setting up a joint venture toconsolidate and operate cable systems in noncore Charter markets.

"We could back them with a combination of cash andproperties to go out and grow their own MSO," Kent said.

This is the third major cable deal that Charter has made ina month. Late in January, Charter, Tele-Communications Inc. and InterMedia Partners agreedon a system swap, valued at $1.3 billion, which brought 400,000 subscribers in Georgia,North Carolina, South Carolina and Tennessee to Charter.

That deal, along with the pending acquisition of MarcusCable, would make Charter the seventh-largest MSO in the country. The Rifkin deal wouldvault Charter into the No. 5 spot, alongside Cox Communications Inc.

Kent said the company's current acquisition strategy isn'tlikely to change anytime soon.

"We are constantly looking at potentialacquisitions," Kent added. "We are very active in the deal marketplace. It's nota secret that we want to continue to grow by acquisition. Our platter is pretty full rightnow."

The Rifkin deal alone nearly doubles Charter's presence inGeorgia, adding nine systems surrounding Atlanta to the company's 10 existing propertiesin the state.

Charter also has two systems in Clarksville and Asheville,Tenn., which are near Rifkin's 12 cabled communities in that state.

And the deal adds to clusters near Charter's St. Louisheadquarters, giving it systems in Mt. Vernon, Centralia, Sparta, Sesser, Steelville,Cairo and Nashville, Ill.

Aryeh Bourkoff, an analyst with CIBC Oppenheimer Corp. inNew York, said the Rifkin deal fits in well with Allen's "Wired World" strategy.

"Rifkin is a well-managed cable property,"Bourkoff said. "The strategy is to extend the Wired World into Rifkin."Bourkoffadded that some of the Rifkin properties that don't immediately fit in with existingCharter clusters -- for example, Miami Beach, Fla. -- could either be used astrade bait with other operators, or as the basis for a new cluster.

"There are some properties that Charter wouldn't mindswapping out," Bourkoff said. "But they are more in the game of establishing newclusters. Just because [a property] is outside of their core region doesn't mean that theywant to swap it. It could be that they would make other acquisitions, as well."

The Miami Beach property is thought by many cable analyststo be a jewel -- a recently upgraded system with 43,000 subscribers in a heavilypopulated and affluent area.

But the other systems acquired by Charter aren't tooshabby, either.

According to filings with the U.S. Securities and ExchangeCommission, Rifkin Acquisition Partners -- which includes systems in three states with190,000 subscribers -- had revenue of $66.6 million for the nine months ended Sept.30.

Adjusted earnings before interest, taxes, depreciation andamortization was $30.7 million for the period, up 9 percent from $28.1 million during thesame period in 1997.

RAP has been growing at a phenomenal clip over the pastthree years, posting revenue of $50.2 million in 1995 and growing to $84.3 million in1997, a 68 percent increase.

Cash flow also has grown 31 percent over that period, from$23.4 million in 1995 to $30.7 million in 1997.

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