NEW YORK — Microsoft co-founder Paul Allen unloaded $568 million worth of stock in USA Networks last week as USA prepares to divest its assets in cable TV, which has become a core business for the billionaire investor.
Move, revealed in an SEC filing, fueled speculation that Allen is raising cash to expand his cable company Charter, likely by bidding for the Los Angeles cable assets of troubled rival Adelphia Communications.
For Charter, the nation’s fourth largest cabler with nearly 7 million subscribers, it would be the second go-round in L.A. Adelphia, the biggest cable operator in Southern California, beat Allen three years ago to acquire Century Communications, which owned the valuable L.A. systems.
With about 800,000 subs, the systems could be worth as much as $3 billion, and Allen is likely to face stiff competition from other bidders this time around as well.
The 20 million or so shares represented Allen’s entire remaining stake in USA Networks. They were sold privately to a group of institutional investors including Legg Mason and Maverick Investments for $28.50 apiece — a slight discount to the current stock price.
USA shares rose 2.39% Friday to $30.05. Company has about 400 million shares outstanding.
Allen is a major investor in DreamWorks and owns a big chunk of Geraldine Laybourne’s Oxygen Media cable net. Most of his assets are held through his private investment firm, Vulcan Ventures.
“We’re really just looking at cable right now,” Vulcan spokesman Michael Nank said.
USA has agreed to sell its USA and Sci Fi cable nets plus its film and TV production companies to giant Vivendi Universal. The old USA will remain publicly traded and focus on amassing Internet and interactive assets. Its current holdings include Home Shopping Network, Ticketmaster, Expedia, Styleclick and Hotels.com. Chairman Barry Diller will continue to run it while he will also become the head of Universal Studios.
Diller and Allen came together in 1997, when Allen sold USA his 48% stake in Ticketmaster and became a major shareholder. The two men have remained friendly. Reps on both sides noted that the USA shares were sold privately, not dumped on the public market, which would likely have driven the stock lower.
In fact, Allen made a tidy profit on the sale. USA’s shares were trading at about $8 when he came into the stock.
Allen plans to exit USA’s board this summer.