St. Louis Wary, Hopeful Over Charter Merger - Multichannel

St. Louis Wary, Hopeful Over Charter Merger

Author:
Publish date:

St. Louis -- Regulators close to Charter Communications
Inc. expressed surprise and relief, but also a touch of consternation, upon hearing of the
MSO's merger with Marcus Cable Co. L.P. and its plans to remain here.

While officials -- who were caught completely off-guard by
the turn of events putting Marcus owner Paul Allen at the head of the company -- were
happy that Charter isn't going anywhere, they're worried about what the merger
will do to the operator's plans to upgrade.

Even more disconcerting to some local regulators was the
fact that they negotiated franchise renewals with Charter on the basis that the company
would remain independent.

"Charter people have been into the city of Florissant
[Mo.], attempting to get the term of their franchise increased, and at no time was there
any conversation that they were negotiating with the company to sell their interest to
them," said Florissant Mayor James Eagen.

Florissant is in the midst of negotiating a renewal with
Charter, which has asked for a 10-year extension of the seven-year contract that it signed
two years ago. Eagen said it bothered him "that they were negotiating with the city
on the basis that they were going to be the owner of the system."

Still, most others in the area seemed optimistic that the
new company would put plenty of money into upgrading the system.

"Charter seems to think that it's going to be a
real benefit," said Martin Brussatti, comptroller for the village of Maryville, Ill.
"Hopefully, that's going to be true."

Across the Mississippi River from St. Louis, Maryville is
one 10 communities, including Madison County, that form the Madison County Cable
Television Consortium.

Allen's decisions to headquarter the newly formed
company in St. Louis -- even though chairman Jeffrey A. Marcus will stay in Dallas -- and
to have current Charter CEO Jerald L. Kent serve as CEO seem to have alleviated many of
the potential concerns.

"We have not yet received the formal applications for
approval; we've only gotten courtesy letters announcing the transactions," said
attorney Carl Lumley.

His firm represents the Madison County group, as well as
the St. Louis County Cable Television Consortium, a larger group of 25 communities
negotiating as one with Charter as their contracts near expiration in October 2000.

"Overall, it would be safe to say that people are
excited about the prospects of a larger company headquartered in St. Louis, but we'll
still have to look at the details of the transaction and make sure that there aren't
any surprises. The company has assured us that there will be no impact on the
upgrade," Lumley added.

Charter announced its $100 million upgrade last spring. In
return, local governments are being asked to increase the terms of their franchise
agreements.

As an advisor, Lumley said, "I feel that there's
definitely a benefit to having someone who has the kind of vision that [Kent has]
expressed, as opposed to financial investors focused solely on profits -- not that
there's anything wrong with that, but it would seem that he has a larger agenda than
that, and that seems to be a positive aspect."

In Florissant, Eagen has asked the city attorney to look
into the franchise agreement.

"You're dealing with supposedly different
people," he said. "They claim that the same people that are with Charter will be
operating this system. That may be true, or it may not be true. Like [The] Boeing [Co.]
took over McDonnell [Douglas]? I'm from Missouri, but I'll have to see it "

Whatever happens, Eagen, an avid cable watcher, wants to
see his city finally leave the era of the "really inconvenient" A-B switch and
move into modern times.

The news caught most off-guard.

"We didn't hear much about it. It just kind of,
boom, happened," said Randy Gardner, who runs the public-access channel that is
carried throughout Charter's north St. Louis County communities. "To me, it
sounds like everything's good. There's a big company behind it.
Everything's been positive, and it seems to be going real well."

Related