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Charter Emerges From Bankruptcy With Major Change: Allen No Longer Chairman

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Paul Allen still controls 35 percent of Charter Communications (NSDQ: CHTR) voting power but he is no longer chairman of the company that was supposed to be the nexus of his wired world strategy — or even on the board. The shift took place quietly as Charter emergend from Chapter 11 bankruptcy earlier this week. Multichannel’s Mike Farrell noticed Allen’s absence from the list of board members in the press release and the mention of Apollo Management partner Eric Zinterhofe as chairman. Vulcan finally admitted late Wednesday that Allen was no longer on the board but told TechFlash it had nothing to do with the recent news that Allen is fighting non-Hodgkin lymphoma. His investment company Vulcan still has the right to appoint four board members.

Allen acquired Charter for $4.5 billion in 1998. The heavy debt load that put Charter in bankruptcy for most of this year started with the way billionaire Allen, who cofounded Microsoft (NSDQ: MSFT), and then-CEO Jerry Kent built the operator into a major player in the late ’90s through 2001, paying often high premiums to consolidate smaller operators under Charter. In 1999 alone, Charter and Allen committed to more than $12 billion in acquisitions and then went public with a $3.5 billion IPO. But the debt started to overwhelm the company after 9/11, when the crisis plus Kent’s decision to leave hit share prices hard; Charter lost 43 percent of its market cap in a matter of days. An accounting scandal followed. No matter how well the company managed on the operating side, it couldn’t overcome the debt. Allen continued to buy shares but he avoided the solution some thought made the most sense: taking the company private. At the same time, his idea about the wired world never quite came together. The acquisition of The Sporting News, the investment in Digeo and Moxi, the idea of cable TV as a portal for non-video info and commerce, and a number of other moves were either too far ahead or not quite enough.