Charter Starts Restructuring
After the nipping and tucking, Charter will operate as five geographically clustered divisions, while having a greatly reduced St. Louis headquarters. Previously, Charter had 10 divisions in three regions, each of which reported to the company's headquarters.
Charter will announce how many jobs it will cut before the year's end. It says the restructuring should be mostly finished in the first quarter of 2003 and it will report the savings from the job cuts during its February 2003 earnings conference call.
The heads of the five new divisions formed during Charter's resizing will report to the company's newly appointed executive VP of Operations, Maggie Bellville, who also has responsibility for marketing, programming, and customer care (see Charter Hires VP of Operations).
Though Bellville's role is broad, Charter CEO Carl Vogel insists she's not a replacement for Dave Barford, Charter's chief operating officer, who remains on "indefinite paid leave" related to a federal investigation into the company's accounting practices (see Charter Puts COO on Leave). "[Bellville] has different roles and responsibilities relative to Dave, and that's about all I can say about that," Vogel said last week during a panel at the BroadbandPlus show.
Charter became the behemoth it is after acquiring 14 companies in a three-year period. Now it is working to patch together all the disparate billing programs, cable systems, and other pieces. "Our customer service has not been good," admits Vogel, who spoke at an investment conference today.
Charter is now the nation's third-largest cable television company, with some 6.7 million customers. However, the company lost about 86,000 basic cable subscribers in the third quarter and has waved goodbye to about 4 percent of its entire subscriber base in the past 12 months as satellite providers swoop in and swipe market share. Also, the company hasn't reported a profit since it went public in 1999, and investors worry that it will eventually seek bankruptcy protection, which would wipe out their investments.
Equipment providers selling to Charter are faced with grim prospects as well. While Charter continues to get its operations house in order, its executives have noted that capital spending will steadily drop, though it hasn't given specific spending guidance for 2003. Contrast that with remarks made by Comcast Corp. (Nasdaq: CMCSA, CMCSK) chief Brian Roberts last week, who noted that even as Comcast chips away at its $30 billion in debt, it will continue to spend aggressively to improve its systems (see Comcast Chief Is Bullish on Broadband).
Among the laundry list of other items irking investors is Charter's founder, Seattle billionaire Paul Allen, a major shareholder. "Where is he?" one investor asked Vogel after his remarks today. "Where is he at your presentations? Where is he on your conference calls? This is really not acceptable at all when your equity securities are down 98 percent."
During his presentation, Vogel said that what Allen does and when he does it are "his [Allen's] call."
Indeed, the only billionaire that has given Charter a vote of confidence lately is Dallas Mavericks owner Mark Cuban, who took a 5.3 percent stake in the company (see Cuban Checks Into Charter).
In late trading Tuesday, Charter shares were up $0.02 (1.32%) to $1.54. One year ago Charter shares traded at $15.13.
— Phil Harvey, Senior Editor, Light Reading