Paul Allen keeps paying and paying for Charter Communications. SEC filings show that Charter board Vice Chairman and ex-Falcon Cable CEO Marc Nathanson recently exercised options obligating Allen to buy his stock for $247 million, or $30.88 a share. That’s about seven times Charter’s recent $4 price.
When Allen was on a cable-buying spree in 1999, Nathanson was one of several operators who sold out for Charter stock but got "put" options not from Charter, but from Allen personally, locking in their price. That means, as Charter’s stock has plunged amid financial and accounting scandals (four former executives have been indicted), Nathanson and cable chiefs Bill Bresnan and Monte Rifkin have been able to make Allen continue to pay them top dollar.
One industry executive close to Charter notes, however, that Allen initially had agreed to pay all cash for Falcon, but he and his investors later asked for half of it in Charter stock. "So it’s not costing Paul any more than the original deal did," the executive said. Nathanson has also bought additional Charter shares and bonds in the open market. Allen’s $7 billion cash investment in Charter is now worth $1.3 billion.