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Charleston Daily Mail

By GEORGE HOHMANN

DAILY MAIL BUSINESS EDITOR

Charter Communications Inc., the largest cable television and broadband services company in the state, announced it is selling its cable systems in West Virginia, Virginia, Kentucky and Illinois in two separate deals valued at $896 million.

Charter is selling its West Virginia and Virginia systems to Cebridge Acquisition Co. Cebridge's systems are managed by Cequel III Limited Liability Co. of St. Louis and operate under the trade name Cebridge Connections.

Cequel spokesman Pete Abel said the sale involves about 210,000 customers in West Virginia and about 30,000 in Virginia.

Michael Kelemen, Charter's government relations director in West Virginia, said local employees were notified of the sale Tuesday. "Certainly there will be no changes in the near future," he said.

Kelemen previously said that Charter has about 525 employees in West Virginia and operates in 35 counties. He said last year that Charter had invested almost $200 million over a four-year period to deploy advanced services in West Virginia.

Charter is Charleston's sole cable provider, although many residents can opt for satellite television and many have access to other Internet providers. Charter is controlled by Microsoft co- founder Paul Allen.

Abel said the purchase of the Charter systems marks Cebridge's seventh deal since 2003. "We do have some experience in this and are able to make these as seamless as possible," he said.

Although the agreement was announced Tuesday, it typically takes four to six months to finalize an acquisition, Abel said. "The bottom line is, it won't happen overnight," he said.

Charter said in a prepared statement that it expects the deals to close in the third quarter.

Abel said, "It is my understanding that by and large the communities served by Charter are already served by upgraded cable systems. Hence our goal is to see what other services could be supported by those systems, such as additional high definition television channels, video-on-demand, cable telephone service and so on.

"We are not promising that specific menu of services will be there tomorrow, but those are examples of the types of services we look to offer if they do not currently exist," Abel said. "They are the types of service we look to offer over the next one to three years, as demand warrants."

Cebridge has been in West Virginia since 2004, when it bought some West Virginia systems from Alliance Communications Partners Limited Partnership and others from Thompson Cablevision.

The West Virginia communities Cebridge already serves include Anawalt, Alum Creek, Buckhannon, Elkins, Iaeger, Northfork, Shinnston, Sissonville, War and Welch.

Billy Jack Gregg, head of the Public Service Commission's Consumer Advocacy Division, said, "I've been impressed with Cebridge and what they've done with the properties they acquired in 2004.

"They've been very aggressive in rolling out upgraded TV services as well as high-speed cable modem data services," Gregg said. "These are in a number of far-flung rural areas. It will be interesting to see what they do now with the acquisition of Charter properties, which encompass urban areas as well as a number of rural areas.

"Because Charter was selling its West Virginia properties, I think it was reluctant to invest any more in rolling out new services," Gregg said. "Now that a new owner is going to take over, the most exciting new service, I would think, would be voice-over- Internet telephone service."

Currently Comcast, in the northern panhandle, is the only cable provider of that service in the state, he said.

If Cebridge does start providing voice-over-Internet telephone service on a wide scale, "that will be good not only for current cable subscribers, but it will give all telephone subscribers a greater choice of providers throughout the former Charter territory, which includes Charleston," Gregg said.

Cebridge currently serves about 400,000 customers in more than 20 states. The major investors in Cebridge are GS Capital Partners, which is the private equity arm of the Goldman Sachs Group Inc., and Oaktree Capital Management Limited Liability Co.

Cebridge was established by Gerald Kent, a former Charter chief executive, according to the Wall Street Journal.

Charter President and Chief Executive Officer Neil Smit said in a prepared statement that Charter's sales are consistent with the company's strategy to divest of geographically non-strategic assets.

Charter, the nation's third largest cable company, posted a loss attributable to common shareholders of $336 million in the three months ended Dec. 31. For the full year, Charter posted a loss of $970 million.

Contact writer George Hohmann at business@dailymail.com or 348- 4836.