Charter Communications Inc. last week unexpectedly chose to
settle its acrimonious battle over its failed acquisition of U S West Media Group's
cable properties in Minneapolis.
In a joint announcement, the two MSOs said they had
terminated a $600 million deal that would have sent 300,000 MediaOne cable subscribers in
the Twin Cities to Charter.
The surprising development came after Charter vowed to seek
arbitration because MediaOne refused to close on the deal after Charter had secured the
necessary regulatory approvals.
Terms of the settlement were not disclosed, nor would
either side discuss whether MediaOne had paid Charter the $30 million in liquidated
damages required under a buyout clause in the contract.
Noting that he was "contractually" prohibited
from discussing the settlement, Charter president Jerry Kent would only say that the
company was "disappointed," and that it "would have preferred a different
"But we're still interested in growth for the
company, and we are involved in a couple of potential acquisitions," Kent said.
The settlement assures that Charter will forgo an appeal of
a recent Federal Communications Commission ruling allowing MediaOne's parent, U S
West Inc., to hold onto the Minneapolis systems pending its plan to split MediaOne Group
and telephony unit U S West Communications into separate public companies.
"This was a difficult situation for all
concerned," said MediaOne president Chuck Lillis, in a prepared statement.
"We're pleased to have it resolved so that we can move forward with our plans to
offer competitive service to our customers in the Twin Cities."
MediaOne spokesman Steve Lang said the company will provide
"a full suite" of new services in Minneapolis, including a telephony offering
that will compete with USWC.
Legal experts said area regulators -- many of whom are
facing franchise-renewal talks -- will be relieved to know who their cable operator will
be in the future.
"We're just happy that there has been
clarification, and that things will be finalized in the next few months," said Brian
Grogan, a Minnesota-based lawyer with Moss & Barnett, legal representatives for the
North Dakota County Cable Commission. "Now we can focus on the future."
U S West agreed to sell the systems to Charter last year,
but it backed out of the deal in November, when it decided that splitting USWC and
MediaOne Group into separate companies would negate the federal cross-ownership rules that
were forcing the divestiture of the Minneapolis properties.
In a related development, the telco got a leg up on its
plan last week, when the Internal Revenue Service ruled that the split-off would be
tax-free for the company and its shareholders.
U S West chairman Richard McCormick said the company would
place the split-off proposal before its shareholders at its annual meeting in June.