Paul Allen - Investments In Media And E-commerce

INVESTMENTS IN MEDIA AND E-COMMERCE

Allen's investments have been guided by his vision of a "wired world," in which people are empowered by their connection to information and allowed to personalize it. According to Allen's Web site, "When you combine [a microprocessor] with a communication channel, you get the possibility of personalized information, a quantum leap in value for the user."

Allen's interest in media and entertainment is reflected in his investments in companies like Ticketmaster, in which he acquired a majority interest in 1993, and Dreamworks SKG, for which he provided $500 million in venture capital in 1995. In 1998 Allen became interested in broadband technology and especially in cable TV companies. Broadband offered an alternative to telephone lines and satellites for the delivery of high-speed Internet services. In 1998 and 1999 he spent an estimated $24.5 billion to acquire companies involved in cable television, wireless modems, Web portals, and more. After acquiring two major cable systems, Marcus Cable of Dallas for $2.8 billion and Charter Communications of St. Louis for $4.5 billion, Allen combined the two and spent an additional $10 billion to acquire 12 more cable companies. When Charter Communications went public in November 1999, its initial public offering (IPO) raised more than $3.2 billion. At the time, Charter Communications was the fourth largest multi-system operator (MSO) in the United States with 6.2 million customers.

In terms of Allen's investment portfolio, his $4.6 billion stake in Charter is second only to his Microsoft holdings. Other major investments include $1.65 billion invested in 2000 in RCN Corp., an over-builder slated to build out high-speed Internet access to 1.3 million homes. As of mid-2000 Allen also had invested $419 million in Internet portal Go2Net for a 30.3-percent interest; $409 million (a 41.6-percent interest) in Metricom, which operates the Richochet mobile data service for wireless Internet access; and $263 million in USA Networks, the parent company of Ticketmaster. In 2000 Allen helped to launch Digeo Broadband Inc., a company that planned to create next-generation content for interactive television and computers.

In 2000, Allen sold 58 million shares of his Microsoft holdings, worth more than $7 billion, and resigned from the company's board of directors. He retained some 200 million shares, worth about $12.5 billion at October 2000 prices. The press speculated that Allen's connections with Microsoft were hindering his investment strategy. His moves left him free to invest in Microsoft's competitors, such as Trans-meta, a new company that included Linux innovator Linus Torvalds on its payroll. Linux is the operating system that poses the most direct threat to Microsoft Windows' market share.

Allen also invests in social and political causes. For example, he has donated $3.4 million to help Washington State conservationists purchase 50,000 acres of forest. Additionally, in 1997 Allen established the Paul G. Allen Forest Protection Foundation.