Do tell: What will Paul do?

Charter Communications investors are certainly gratified to hear that the MSO's cable operations are on track. And, yes, it's wonderful to hear Charter executives express confidence in plans to sell $1.8 billion worth of systems. And who, in this depressed stock market, wouldn't be thrilled to hear about cash flow flowing and capital spending easing?

What investors are not hearing is an answer to: What will Paul do?

Paul, of course, is Paul Allen, the co-founder of Microsoft Corp. who spent seven of his many billions of dollars to assemble Charter's portfolio of 6 million cable subscribers. With Charter's stock down 90% in a year, Allen is hinting that he might put a couple more billions of dollars to work bailing Charter out of its financial funk, injecting more equity or, far better for almost everyone, buying Charter's debt on the cheap and then converting it into equity.

Investors flocked to a St. Louis hotel last week to hear what Allen's next move might be. Charter offered encouraging financial guidance; Allen offered nothing but a tease.

With Charter's stock trading at less than $3 per share and bonds at 50 cents on the dollar, said Allen's top investment adviser, Bill Savoy, "we have made no decision or plan that we feel we need to inform the investment community about." But, he added, "equity and debt markets have failed to consider the sponsorship this company has."

That's ridiculous; Savoy knows it. Of course investors know Allen—who owns 60% of the company—still has billions of dollars left despite the burst dotcom bubble. The reason Charter securities trade like those of a company headed for Chapter 11 is that investors aren't sure Allen's willing to step up.

The first report (B&C, 6/17, page 4) that Allen was considering taking the company private appeared in June. In July, he and other Charter insiders bought about $25 million worth of Charter stock and bonds, a vote of confidence that the market ignored. In August, Allen's Vulcan Ventures acknowledged in a securities filing that he might take it private or buy in some debt. Not a blip in the market. "Imagine where this would be trading if we didn't see Allen standing there," said one of the 150 money managers and analysts at the meeting. "Does he really believe, or is he worried about throwing good money after bad?"

Savoy certainly wants to keep investors thinking Allen will do something. Savoy carefully noted that Allen started dumping technology stocks the day new-media AOL announced its takeover of old-media Time Warner, because that was a sign that tech market values were no longer supportable. Vulcan raised $4.5 billion in stock sales. Allen also hedged about two-thirds of his stake in Microsoft against a stock drop while it was still in the $80-$100 range. "We have more than ample resources," Savoy said. Resources for what remains unclear.