BY STACI D. KRAMER AND K. C. NEEL Former Charter Communications CEO Jerry Kent jumped back into the cable industry last week when his firm, Cequel III, struck a deal to invest in and manage 11th-ranked MSO Classic Communications. Kent, the new president and CEO of Classic, and majority Classic investor Oaktree Capital Management see the rural systems as a platform from which to build a major national MSO. “It allows us to put our infrastructure and team in place,” says Kent. “We believe now is an opportune time to invest in rural cable.” Kent wouldn’t say how much Cequel paid or what percentage it owns of Classic, which also has other investors. Rural subscribers are estimated to be worth between $800 and $1,200. Classic has about 325,000 basic video subscribers in ten states. Observers speculate that Kent’s other acquisition targets may include Galaxy Cable, some AT&T Broadband leftovers and some of the TCA Cable assets acquired by Cox Communications. Classic declared bankruptcy in November 2001 but emerged last month after a debt restructuring. It has less than 50% basic penetration and operating margins in the 30% range, offering what Kent calls “tremendous upside.” If anyone can turn Classic around it’s Kent, says Robert Routh, media analyst with Natexis Bleichroeder. He figures Kent will go down the same path he walked when he was building Charter: Take a bunch of subpar and technologically disadvantaged properties and cut costs by reducing head-ends and stabilizing customer counts, resulting in improved cash flow and value. “He can’t do that forever, but he could do it for a couple of years while he expands the company,” Routh says. Headquarters will move to St. Louis, where Kent is located, from Tyler, Texas. Dale Bennett, who was Classic’s president, will stay on as Cequel’s VP of operations reporting to Cequel SVP of ops Bill Shreffler.