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Crawford Buys Into Cable

After a year-long hiatus, influential investor Gordon Crawford is getting back into cable in a big way by significantly increasing his position in operators with whom he had drastically cut back in 1999.

According to documents filed with the Securities and Exchange Commission last week, Crawford increased his cable portfolio by more than $3 billion between Sept. 30 and Dec. 31. His largest purchases: 57 million shares of AT&T Corp. and 16.5 million shares of Comcast Corp.

Crawford, the senior vice president of Capital Research & Management Co., did not return phone calls seeking comment.

The investor had been rumored to be back in the cable game for months, but it wasn't until last week-when Capital Research and Capital Guardian released their year-end portfolio reports-that the extent of his return was revealed.

One of the so-called "media Mafia," a group of influential investors that helped put cable on the map in the early 1980s, Crawford appeared disillusioned with the industry earlier this year.

Some of the media industry's biggest players-including Liberty Media Group chairman John Malone, AOL Time Warner Inc. CEO Gerald Levin and USA Networks inc. chairman Barry Diller-have regularly sought Crawford's counsel. He reportedly has had a hand in some of the industry's largest deals, including Time Warner Inc.'s purchase of Turner Broadcasting System Inc. in 1995.

Crawford also is rumored to be among those involved in helping News Corp. chairman Rupert Murdoch in his efforts to buy Hughes Electronics Corp., the parent of DirecTV Inc. According to sources, Crawford's funds could contribute about $1 billion to News Corp.'s bid.

According to industry observers, Crawford was disturbed by competition from direct-broadcast satellite providers overbuilders and significantly reduced his holdings in pure-play cable operators last year from about $8 billion to less than $600 million.

According to one observer, Crawford exited cable stocks last year after lamenting that prices had reached 20 times estimated cash flow, while growth rates still hovered in the 15-percent range.

"It used to be that you could pick these stocks up for 8 [times] to 10 times cash flow and get 15-percent growth rates," the observer said.

But that was in 1999, when cable stocks hit their peak. Last year, the stocks were down about 20 percent.

Although cable stocks rallied in the fourth quarter of last year, they apparently reached a point at which Crawford believed they were cheap enough to represent an adequate return.

When he trimmed his holdings last year, Crawford held onto a few key issues, including Time Warner Inc.-now AOL Time Warner Inc.-but completely divested from Adelphia Communications Corp. and Cox Communications Inc.

But in the three months between September and December, Capital Research-Crawford's largest fund, with about $216 billion in assets-replenished those positions and then some, buying 100,000 shares of Adelphia and 1.85 million shares of Cox.

The fund also boosted its stake in AT&T Corp. by 56 percent, adding 57 million shares to end the period with 158.1 million shares of the phone giant's stock.

Capital Guardian, a smaller fund with about $40 billion in assets, also bought heavily in cable during the period. It grew its AT&T stake by 3.5 million shares to 5.3 million; increased its Cablevision Systems Corp. stock by 1.6 million shares to 5.8 million; and added another 1.1 million shares to its AOL Time Warner stake.

Crawford also apparently had a yen for DBS, upping his stake in EchoStar Communications Corp. from 75,000 shares in September to 1.8 million shares as of Dec. 31.