Cuban Checks Into Charter
Does billionaire Mark Cuban see something the masses don't? The former Internet entrpreneur and Dallas Mavericks owner has bought 15.6 million shares of Charter Communications (Nasdaq: CHTR) for a 5.3 percent stake, according to a regulatory filing released Friday. Cuban is also the founder and president of HDNet, the high-definition television network.
The filing didn't disclose when Cuban bought the shares or how much he paid. In an email interview with Light Reading, Cuban wrote he "paid a lot less than [he] think[s] they're worth."
Charter's stock closed at $0.94 on October 24, the day before the filing disclosing Cuban's investment was released. In early afternoon trading on Monday, Charter shares were up $0.01 to $1.26. One year ago, Charter's stock traded at more than $14 a share.
"I have investments across the cable and satellite industries," Cuban writes. "I just thought Charter stock got hit a little too hard. We are at a time where Wall Street would rather walk away from stocks and that has created an opportunity in cable and satellite."
Last week Charter, the fourth-largest cable operator in the U.S., placed its chief operating officer on indefinite paid leave related to a federal investigation into the company's accounting practices. As a passive investor, Cuban says Charter's troubles aren't bothering him.
"Although you never know for sure what regulatory agencies will do, in going through the numbers, I only pay attention to cash in and cash out," he writes. "I don't have the slightest doubt about Charter's handling of their numbers. They are very clear and specific."
Cable providers such as Charter face competition from satellite companies such as Echostar Communications Corp.'s Dish Network and Hughes Electronics Corp.'s (NYSE: GMH) DirecTV. But such companies are also seen by many as the only companies that can legitimately challenge the big telephone companies in offering broadband Internet access and other digital services, such as secondary phone lines using voice-over-IP technology.
Cuban views digital television and voice service providers as bit merchants. "I think it's a very Darwinian business where distribution companies will sell their bits in applications that return the most cash," he writes. "Whether that's telephony, HDTV, video on demand, interactive services, music or whatever really doesn't matter to me.
"I think Charter is one of the companies with a strong management team capable of accomplishing positive cash flow quickly and optimizing return [on investment] per bit [delivered]."
In addition to his stakes in Charter and HDNet, Cuban's disclosed investments include a 5.8 percent stake in Lions Gate Entertainment, the movie and TV production and distribution concern.
— Phil Harvey, Senior Editor, Light Reading