Callahan, Liberty Break Ground Abroad

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Two Denver-based firms put on their cable cowboy hats last
week, nailing down first-of-a-kind deals in international markets.

The companies -- cable investor and operating group
Callahan Associates International LLC and Liberty Media Group -- are no strangers to pay
TV abroad. But their deals definitely broke ground.

CAI became the first foreign investor to agree to buy cable
systems owned by German telco Deutsche Telekom A.G. It agreed to purchase 55 percent of
Deutsche Telekom's 4.2 million-subscriber operation in the North Rhine Westphalia
region.

About 1.2 million of those homes are owned directly by
Deutsche Telekom, while the remainder are independent, so-called net level 4 homes that
receive programming via Deutsche Telekom's headend.

CAI chairman and founder Richard Callahan said the firm and
its investment partners have raised $3 billion for the purchase and expansion of the
systems. He declined to comment on a broken-out purchase price, although German press
reports pegged it at about $1.9 billion.

CAI may also bid on systems in the other nine regions into
which Deutsche Telekom's systems have been divided, and it plans to provide a full
menu of advanced services such as telephony and data.

Deutsche Telekom will retain 25 percent of the system, and
about 24 percent could be sold to the public. The telco is in talks with other firms,
including heavyweight United Pan-Europe Communications N.V. (UPC), to reach similar
agreements in the other regions.

Deutsche Telekom's entire system includes 18.5 million
connected homes, about 6 million of which are directly owned by the telco. The system
posted a loss of $303 million last year on revenue of $1.26 billion.

The deal "puts us in a leadership position,"
Callahan said. CAI is aiming to build a "pan-European property base," building
on existing cable investments in Spain and France. Part of the European investments, he
added, could be sold in an initial public offering over the next couple of years in an
effort to fund development.

Meanwhile, Liberty's agreement to pay $137 million in
cash for 19.9 percent of Canadian programming group Corus Entertainment Inc. is seen as a
positive step for both companies.

It's "another notch in [Liberty's]
belt," said Mark Quigley, an analyst with The Yankee Group in Canada. "This is
something they've done in other countries in the world, and I think Canada was just
the next logical step, particularly when you look at it in the context of what's
happened recently in the Internet world with Time Warner Inc. and America Online
Inc." agreeing to merge.

Corus was partly spun out from Canadian MSO Shaw
Communications Inc. last year. It owns youth-oriented channel YTV; 10 percent of CMT
Canada with partner Gaylord Entertainment Cos.; and 20 percent of kids' channel
Teletoon, partners in which include The Family Channel (no relation to Fox Family
Channel), Nelvana Ltd. and Cinar Corp. Corus' portfolio also holds 19 radio stations.

The deal could also "greatly expand the potential
audience that Corus will have," through potential distribution in the United States,
Quigley said. And Corus could expand onto the Web through stronger ties to broadband
Internet platform Excite@Home Corp., in which Liberty parent AT&T Corp. and Shaw hold
stakes.

The deal is dependent on Shaw successfully acquiring
domestic broadcaster Western Communications International and receiving Canadian
regulatory approval.

Mike Galetto contributed to this report.

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