Charter Buys Another One: Helicon

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Charter Communications notched its sixth systems
acquisition of the year last week when it agreed to acquire Helicon Cable Communications
for $550 million.

Owned by billionaire Microsoft Corp. cofounder Paul Allen,
the St. Louis-based MSO will pick up 171,000 Helicon subscribers in 10 states, at a cost
of about $3,200 per subscriber.

The transaction, which is expected to close in the fourth
quarter, will give Charter 3.6 million subscribers on a pro forma basis, pending deals to
acquire 464,000 subscribers from Rifkin & Associates Inc., 170,000 customers from
Greater Media Inc. and another 127,000 from Renaissance Media Group LLC.

Charter has also signed a letter of intent to purchase
402,000 subscribers from InterMedia Partners for $1.3 billion in cash and cable
properties.

In a prepared statement, Charter president and CEO Jerald
L. Kent called the Helicon deal part of a "calculated acquisition process"
designed to advance an aggressive clustering strategy that will "amortize our
technology costs over a large base."

"Our acquisitions over the last few months are part of
building Charter strategically, and they fit into our overall business plan," Kent
said.

Helicon operates nine cable systems in 10 states: Vermont,
Pennsylvania, West Virginia, North Carolina, South Carolina, Tennessee, Georgia,
Louisiana, Alabama and New Hampshire. Waller Capital Corp. advised Helicon.

David Baum, spokesman for the Englewood Cliffs, N.J.-based
operator, said all but 360 miles of the company's 6,600 miles of plant are at least
at 450 megahertz, with systems in six states at 550 MHz.

Analysts said the $3,200-per-subscriber price for the
Helicon systems proves that current valuations for cable properties "seem to be
holding up."

Ted Henderson, a cable analyst with Janco Partners in
Denver, said he expects Allen to continue to focus on acquiring small to midsized
operators that may not have the financial wherewithal to compete with the
telecommunications giants that are being created by industry consolidation.

"And [Allen] can acquire them at a reasonable price,
rather then trying to take a big chunk out of a big operator," Henderson said.
"Let's face it: Somebody has to consolidate these small to medium-sized cable
operators. Who's a more logical buyer?"

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