The first casualties of Paul Allen's deal to combine
Charter Communications Inc. and Marcus Cable Co. L.P. are likely to include the top two
executives at Marcus.
Chairman Jeffrey Marcus, who was to be chairman of the
combined operation, plans to announce his resignation this week, a source close to the
situation said. And incoming CEO Jerald Kent, who currently runs Charter, has already told
Marcus president and chief operating officer Lou Borelli that he won't be kept on.
Marcus is resigning partly because of potential
cross-ownership conflicts involved with his job as CEO of Chancellor Media Corp., a
growing media conglomerate.
But it also stems from what he feels were broken promises
in the wake of Allen's $4.5 billion Charter acquisition about how actively he would be
involved in Allen's cable transactions, about whether those cable operations would be
based in Dallas and about Marcus' role in choosing the cable operation's CEO, said the
source, who declined to be identified. Allen bought Marcus Cable for $2.8 billion in
"This is Amos, take two," the source said,
alluding to Amos Hostetter's public breach with U S West Media Group (now MediaOne Group)
over what Hostetter said were broken promises about MediaOne being based in Boston after
he sold Continental Cablevision Inc.
Kent -- who was in Dallas for two days of meetings with
Marcus officers and directors last week -- could not be reached for comment. Marcus, who
was said to be on vacation, could not be reached either. Borrelli said he couldn't
comment. And spokesmen at Allen's investment arm, Vulcan Ventures, declined comment.
Allen, the billionaire who co-founded Microsoft Corp. with
Bill Gates, agreed to buy 1.2 million-subscriber Charter last month, doubling the size of
his cable holdings. The acquisitive Allen wants to get bigger, and several sources said
last week that he could be close to a deal with Century Communications Corp. -- yet
another 1.2-million-subscriber MSO.
Along with the Charter announcement came word that the
combined company would be based in St. Louis, with Marcus as chairman and Kent as CEO, and
that Kent would oversee combining the two companies' management teams.
When Allen bought Marcus Cable, employees were relieved.
Had the company been sold to another MSO, management probably would have been forced out
or moved out. But Marcus' deal with Allen looked like an exit strategy that left
Dallas-based management firmly in place, with a rich new owner that loved the business.
Then came the Charter deal -- which, at least at the end,
didn't involve Jeff Marcus -- and the shift to St. Louis. "You can say that we're all
pretty confused," one Marcus executive said last week.
Other than Borrelli -- one of the Marcus executives who
made money by selling a piece of the company to Allen -- it was unclear whether firm
judgments had been made on retaining or letting go any of Marcus' 200 staffers in Dallas.
Many may be asked to move to St. Louis, although some may balk at the move, knowing that
Allen plans to acquire more cable systems.
Marcus executives who met with Kent or who were briefed on
the meetings said the Charter CEO hewed to the line that employee evaluations were just
beginning, and that it was premature to talk about job losses.
Kent talked about establishing transition teams, Borrelli
said, adding that he has urged Marcus employees to keep doing their jobs and to make the
transition as smooth as possible.