Marcus Cable Co. L.P. chairman Jeff Marcus has agreed to
become CEO of Chancellor Media Corp. in a move blessed in advance by the man who bought
out all of Marcus' limited partners last week.
Sources close to Marcus confirmed that he has accepted the
Chancellor job, but he will remain chairman of Marcus Cable and retain an equity stake in
the MSO. He will even keep an office and an assistant at the MSO's headquarters in
Dallas. It will probably take several weeks before he shifts over to Chancellor, sources
Last Thursday, Paul G. Allen closed the deal to buy out all
of the limited-partnership interests in the 1.3 million-subscriber MSO for about $2.8
billion, an Allen spokesman said. That makes Allen the principal owner, although Marcus is
Allen knew of Marcus' desire to join Chancellor, and
he approved it, provided that Marcus retains a role in the company and doesn't leave
until after his replacement as CEO has been on the job for a while, a source involved in
the Allen-Marcus negotiations said.
Marcus could not be reached for comment last Friday, and
Chancellor officials did not immediately return calls seeking comment.
Allen decided not to publicize Marcus' plans at the
time of the deal because he worried that it might send the wrong message to the
company's employees, the source said.
The deal, announced April 6, was structured in such a way
as to close quickly, because Allen was buying out only the limited partners. Because the
general partner remained the same, there was no real change of control, so there was no
need to have the change approved by bondholders and franchise authorities.
Chancellor's largest shareholder is Hicks, Muse, Tate
& Furst Inc., and its chairman, Thomas Hicks, has been serving as interim CEO at
Chancellor since its former CEO resigned April 14.
Hicks and Marcus are close friends: Hicks, Muse was one of
the limited partners that sold out to Allen, and Hicks brought Marcus in as a limited
partner in the Texas Rangers Major League Baseball team.
A source close to Allen said he "has Jeff's
commitment to stay involved. His name is still on the door, and he still has a meaningful
economic investment" in the company, the source said. "But Paul gets to pick the
main guy." And it minimizes the chance that sometime in the future, Allen and Marcus
might have clashed over strategy or direction.
Allen will look for someone with cable experience, and he
already has several potential candidates in mind, according to the source.
Joe Estrella contributed to this story.