Consolidation in the US Cable industry continued yesterday with St Louis-based Charter Communications Inc announcing a deal to acquire fellow privately held cable TV operator, Falcon Communications. The deal was valued by Charter at approximately $3.6bn in cash and stock but the company did not provide a breakdown or comment on how much assumed debt was included in the transaction.

The acquisition will help move Charter, which is owned by Microsoft Corp founder Paul Allen, into the big leagues and also sees the company stealing away a network from under AT&T Corp’s nose. When the deal is completed Charter will have 5.5 million subscribers making it the nation’s fourth-largest cable company, according to the Charter.

Through Charter, Allen is building up his cable TV ownership under the banner of his ‘Wired-World’ strategy. The company says its aim is to upgrade existing cable networks to deliver telecommunications services to its subscriber base a strategy already embarked upon by AT&T Corp. In fact, AT&T Corp had been planning to offer its services over the Falcon network a partnership thrown into doubt by Charters acquisition.

AT&T acquired 46% of Falcon when it acquired Tele-Communications Inc last year and announced in January that it would be offering its telephony services over the Falcon network. Yesterday, AT&T refused to comment on how Charter acquisition of Falcon would effect its plans. Charter said the AT&T had approved the transaction but the carrier refused to confirm or deny the statement.

The decision to sell the company to Charter, however, was made by Falcon founder Marc Nathanson, his family and the company’s management who together own 54% of Falcon. Falcon’s cable network passes approximately 1.6 million homes and has around 1 million subscribers scattered around rural areas of California, the Pacific Northwest, Missouri, North Carolina, Alabama and Georgia.

Allen bought Charter in January 1999 with a $4.5bn investment and joined with his Marcus Cable business. Since then the company has been on a spending spree acquiring seven cable businesses or customer networks. In May, Charter paid $845m for Avalon Cable Television. In March, Charter paid $550m for Helicon Cable Communications, just a month after acquiring Renaissance Media Group LLC for an undisclosed amount.

In February, Charter also acquired a 28-community network from Greater Media Inc as well as systems in Southern California from American Cable Entertainment and InterMedia in the Southeastern United States. It also acquired customers managed by Rifkin & Associates Inc in Miami Beach, Tennessee, Virginia and West Virginia. Following the close of all pending transactions, Charter will serve approximately 5.5 million customers.