Charter: The Name Remains the Same

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The new name for the Charter Communications Inc.'s and
Marcus Cable's operations after they combine early next year will be Charter
Communications, with "A Wired World Company" tagged on at the end..

That's no bombshell. But Charter president and CEO
Jerald Kent said last week that it shows that new owner Paul Allen plans to keep his
cable-management team in place -- even if Allen is able to swing more cable deals.

Stability is an issue at Charter, because when Allen bought
Marcus in April, he and his representatives said Marcus' management talent was a big
reason why the Dallas-based MSO was his first cable acquisition.

Then, after the Charter deal in July, Kent got the CEO job,
and many Marcus senior executives ended up being swept out or choosing not to take jobs in
St. Louis.

Allen is still cable-shopping. The Microsoft Corp.
cofounder and his investment advisers are looking at other cable operators and
"related businesses," Kent said, adding that he has been involved in those
talks.

The big problem now is price: "We're not prepared
to grow at the expense of paying unrealistic prices," Kent said.

Another person close to the Allen camp agreed, saying that
potential sellers want to get higher valuation multiples than the 14 times 1999 cash flow
that Charter's sellers got, even though cable-stock prices are falling.

Kent said Allen paid a premium for Charter to get its
management. Marcus chairman and CEO Jeffrey Marcus took the CEO job at Chancellor Media
Corp. shortly after Allen bought out Marcus' limited partners. Kent said he
didn't think that Allen would have paid Charter's asking price of $4.5 billion
if Marcus had stayed on as CEO.

"We don't need to pay that premium on other
deals," Kent added.

Barring a "mega-transaction" involving an MSO
much bigger than the combined Charter's 2.5 million subscribers, Kent said, future
cable deals by Charter would be treated as acquisitions, and not as a merger of equals,
like the Marcus Cable merger.

In past acquisitions, he said, Charter hasn't kept on
corporate-office employees. "In this situation, we went out of our way to combine the
companies." More than one-half of Marcus' 200 Dallas staffers were offered jobs,
he said.

Kent said about 45 of Marcus' Dallas-based corporate
employees accepted Charter offers, including the data-processing center and the budgeting
and regulatory departments, which will remain in Dallas.

About one-dozen Marcus executives have agreed to move to
St. Louis, including engineering vice president John Petrie and his staff, Kent said,
adding that Charter has some other job offers pending.

Nearly all local-system employees stayed on, meaning that
"97 percent" of Marcus' employees shifted over to Charter.

As previously reported, Marcus president and chief
operating officer Lou Borrelli was not offered a job with Charter. Kent said he won't
hire a COO, but Charter is looking for an executive vice president and assistant to the
president, spokeswoman Anita Lamont said.

Operational management duties will be shared by senior vice
presidents David Barford and David McCall, who currently run Charter regions, and who will
see their territories grow after the companies are formally combined early next year.

Marcus' vice president of operations, Chris Fenger,
will move from Dallas to Wisconsin to run that regional operation, which includes about
400,000 subscribers, Kent said. But among those leaving the company are senior vice
president of finance and development Dan Wilson and programming and marketing vice
president David Intrator.

Meanwhile, Charter and Marcus are well into the process of
transferring more than 1,000 local cable franchises over to Allen's ownership.
Charter estimated that about 20 percent of its franchises, on a subscriber-count basis,
have already been transferred. Marcus' director of government affairs, Joe Camicia,
said "more than 100" of the 580 Marcus franchises that need transfers have been
approved.

Carl Lumley, a partner at St. Louis law firm Curtis,
Oetting, Heinz, Garrett & Soule, who represents about 25 franchise authorities
overseeing some 75,000 subscribers in the St. Louis area, said public hearings on the
transfers and on franchise renewals there have been quiet.

"There doesn't seem to be much concern about the
transfer," he said. "Everyone seems to be accepting the presentation that this
is a positive move."

Under terms agreed to before the Allen deal came about,
Charter is likely to get renewals that will include incentives for the operator to upgrade
450-megahertz systems to 750 MHz with two-way capabilities, Lumley said.

The sooner the company completes $80 million in upgrades,
the longer the franchise term, ranging from eight years to 12 years, he added.

Camicia said he hasn't run up against regulators who
are worried about who will be running Allen's cable operations in the future.
Regulators want to know that local managers will remain in place, he said. And they want
to know: "What does Paul Allen want to come in and do?" he added.

Allen wants his cable operation to be a technology leader,
and that will require a new approach from Charter managers, who had been focused on
quarter-to-quarter financial results and returns to Charter's financial investors,
Kent said.

"It's a change in the management mind-set,"
he added. "I think it's going to be a challenge."

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