April 6, 1998 12:55 PM PDT
Paul Allen to buy Marcus Cable
The deal marks Allen's largest personal investment to date. It also comes after last year's $1 billion investment in Comcast by Microsoft. The investments underscore the convergence of personal computers with television. Marcus, for example, has struck a deal with @Home to provide high-speed Net access via cable systems--a fledgling but potentially large market.
"For over 20 years, I have been talking about and investing in the 'wired world,' a connected future marked by the merger of high-bandwidth data channels, the power of the personal computer, and the availability of compelling content," Allen said in a statement. "Cable companies are uniquely positioned to deliver the next generation of advanced data services, and are therefore a perfect fit for this investment strategy."
At a press briefing today, Allen added: "I will finally have some wires for my wired world." His remarks drew laughter.
The price of today's deal represents 11 times Marcus's annualized cash flow at closing. Terms of its financing, however, were not disclosed. Cable stocks such as Tele-Communications Inc. (TCI) and Comcast (CMCSA) were up in today's trading. Some analysts speculated that Allen's investment could give them a further boost, as occurred when Microsoft bought a stake in Comcast.
Marcus founder Jeffrey Marcus will remain the general partner and chairman of Marcus Cable. "Earlier this year when we engaged Goldman, Sachs & Co. to evaluate alternatives for us, one of our options was to find a strategic partner who would want to build upon the base that we have created," he said. "In Paul Allen, we have an individual who believes strongly in the future of the cable television business."
Earlier today, the Wall Street Journal reported that Allen would acquire Marcus Cable for about $2 billion plus the assumption of $1 billion in debt, at 14 times the trailing 12-month cash flow.
(Paul Allen is an investor in CNET: The Computer Network).