Kent Could Be Mulling a Re-Entry

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Former Charter Communications Inc. CEO Jerald Kent is apparently thinking about getting back into the cable industry — and is talking to backers about that prospect.

According to sources, Kent has been in discussions with several investment bankers and private-equity funds, including one of his former backers.

The sources, mostly in investment-banking circles, said Kent has met with various bankers and private-equity funds, possibly to buy cable properties, although no deals were seen as imminent.

He could not be reached for comment last week.

Kent — whose departure from Charter caused the MSO's stock to decline by 20 percent in a single day — would be one of the bigger names among ex-system executives and owners who have cashed out, but are looking to get back in the game.

Among former cable executives in that position are Bresnan Communications Inc. president Bill Bresnan, former Vista Communications president Neil McHugh and former Buford Cable president Ben Hooks.

Bresnan, who sold his systems to Charter in 1999 for $3.1 billion, was a bidder for AT&T Broadband's Montana systems. He was said to be close to a deal, but AT&T put such potential transactions on hold in July, after Comcast Corp.'s bid put the cable unit in play.

McHugh and former backer Boston Ventures started Vista III Media last year to acquire secondary cable markets. Hooks also is looking for systems and has about 7,000 subscribers, mainly in the South.

A well-respected cable executive, Kent left Charter in September after a falling out with Charter chairman and Microsoft Corp. co-founder Paul Allen. At the time of his resignation, Kent said he would take some time off to relax and think about his next venture.

Several sources said that Kent was in New York last month, making the rounds of various investment firms to gauge their interest.

One of Charter's former investors – private equity firm Kelso & Co. – said its executives have met with Kent and would be more than willing to get involved with him again.

"We have spoken with Jerry," said Kelso's president and CEO, Frank Nickell. "We've had a discussion along the lines of, 'If I come up with something, would you be interested in investing?' We said, 'Absolutely.'

"We would certainly look at anything that he might come up with, and if it makes sense we would do it. But there is nothing we are looking at."

Nickell stressed that Kelso has not committed any funding to Kent.

Kelso has about $1.5 billion available, but limits its investment to $350 million for a single client. While that would be a start, it wouldn't buy much, given the high price of cable operations.

Kelso was one of the first investors in Charter when it was known as Cencom Cable Associates. Kent, a Cencom founder, helped make Kelso and other investors a lot of money when Charter sold out to Allen for $4.5 billion in 1998.

"It was a very attractive return," Nickell said of the Charter investment.

The belief is that Kent could continue to make money for investors.

While he clearly could raise money, the question is whether Kent would want to get back into cable after such a short time away.

"I think he took a breather," Nickell said. "He's only now sort of starting to get back into things"

Just how much funding Kent might have lined up was unclear, although one source said Kent has already raised $1 billion from a division of Toronto-Dominion Bank and from Providence Equity Partners Inc., a Rhode Island private equity firm.

Ian Crowe, vice chairman of the media, telecom and technology group at TD Securities — Toronto-Dominion's investment arm — declined to comment on any business arrangement with Kent. But he said Kent would have little trouble raising cash.

"Jerry's got a great following on the Street," Crowe said. "If he wants money, he can certainly get it."

Providence Equity has mainly been involved in funding telecommunications companies, but has been in on some smaller cable deals in the past. In December, it helped Northland Cable Networks raise $16.6 million to buy systems and was one of nearly a dozen firms that helped now-defunct cable overbuilder Digital Access Inc. raise about $450 million in 1999. Providence Equity was also in on a $50 million capital infusion for American Cable Entertainment.

Providence Equity declined comment.

WHAT TO BUY?

Just which cable properties Kent might buy also is a bit of a mystery, given the dearth of available systems.

Although there are several rural systems available, most observers don't believe that would attract Kent. That leaves non-strategic systems from larger cable operators like AT&T Broadband, Comcast Corp., Cox Communications Inc., Adelphia Communications Corp. and Charter.

"I suspect he would go to the big boys and see what he can buy from them," said one MSO executive who asked not to be named.

Joseph Duggan, a principal in DH Capital LLC, an Englewood Cliffs, N.J., investment bank he founded with former Helicon Cable executive Peter Hopper, said Kent's re-entry into the cable market could give the industry a needed boost.

"I'm not sure there is a limit on how much money Jerry can raise," Duggan said. "I think it would absolutely be a shot in the arm if Jerry came back [to cable]. He was a great face for the industry."

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