Charter Takes Final Steps on Sale

Author:
Publish date:
Updated on

Charter Communications Inc. expects to have met the
conditions for completing its $600 million acquisition of U S West Media Group's
(UMG) Minneapolis cable properties by early this week.

As of last Friday, the St. Louis-based MSO had received
approval on the four remaining franchise transfers that it needed to comply with the terms
of the deal.

The towns of Burnsville, Egan, Hastings and North Hudson,
Minn., all approved Charter's transfer petitions last week, while the city of St.
Paul voted to accept a new franchise agreement with the company.

Charter has now been authorized by all of the necessary
local franchising authorities in the area to complete a deal that will bring it some
300,000 cable subscribers currently served by MediaOne, UMG's video subsidiary.

Under the terms of its purchase agreement, Charter can
officially close 10 days after meeting all contract requirements, said MSO chairman Barry
Babcock.

'We'll be ready, willing and able to close at
that time,' Babcock said. 'Our hope is that U S West will follow through on the
obligations that it has under the contract.'

That, however, remains problematic.

Colorado-based UMG informed the Federal Communications
Commission last week that franchise transfers 'by no means' meet all of the
requirements for closing.

In a letter to the FCC's Cable Services Bureau,
MediaOne said a transfer approval is required from the Minnesota Public Utilities
Commission, as well as certain other consents and pre-closing conditions.

As such, a sale of the Twin Cities properties 'is
unlikely to close before the end of February at the earliest,' it concluded.

Jim Allen, spokesman for the Minnesota Department of Public
Service, which has recommended that the PUC approve the transfer, said it's unknown
when the commission will rule on the suggested transfer.

Sources said UMG still hopes that the FCC will act before
it's forced to sell to Charter or before it risks being in violation of a federal
divestiture order.

UMG parent company U S West Inc. has asked the FCC for an
extension until July of an agency waiver that allowed it to own the Minneapolis systems
while it sought a qualified buyer.

However, the company is now in the process of dividing
telephony unit U S West Communications Inc. (USWC) and UMG (soon to become MediaOne Group)
into separate companies, hoping that will abrogate federal cross-ownership rules and allow
it to scuttle the Charter deal.

'It's obvious that U S West would prefer not to
do anything until the FCC acts,' Babcock said. 'But I hope that if the FCC
doesn't grant its request, it'll drop all of these objections.'

MediaOne spokesman Steve Lang said he was 'at a
loss' to understand what Babcock was referring to.

'We've been working consistently to fulfill all
of our obligations under the contract,' Lang said. 'Proof of that is [the fact]
that we worked to get the LFA [local franchise authority transfer] approvals.'

In a related development last week, the Northwest Suburbs
Cable Communications Commission, one of the Minneapolis franchising authorities, filed a
petition with the FCC supporting UMG's request for a waiver extension.

It based its decision on MediaOne's promise to upgrade
its systems within three years. Charter, it said, would only commit to a five-year plan.

Moreover, it said, MediaOne promises to offer residential
telephone service in competition with USWC, while Charter has 'expressed
disinterest' in entering the local phone market.

Related