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Regulation

Charter to New York: We Ain't Going Anywhere

Forget about Charter selling off all its cable systems in New York State and leaving the state meekly with its tail between its legs.

In the company's second-quarter earnings call Tuesday morning, Charter Communications Inc. Chairman & CEO Tom Rutledge made it clear that Charter has no intention of obeying the state Public Service's Commission order to exit the state because of its allegedly repeated failures to meet its cable buildout and broadband speed commitments. Instead, Rutledge said Charter will try to resolve the conflict with state regulators and, if necessary, will fight the PSC's actions in court.

"Hopefully we can work it out," Rutledge said in response to an analyst's question on the call, noting that it will likely take some time. "But, if necessary, we'll litigate. We believe we're in the right."

Last Friday (July 27), the New York PSC formally revoked its approval of Charter's acquisition of Time Warner Cable in 2016, citing the company's repeated failures to extend cable and broadband service to less populated parts of the state as promised and other "egregious misconduct" over the past two years as its reasons. The PSC also ordered Charter to file a plan within 60 days to sell off all its cable systems in the state to another provider and filed a request with the State Supreme Court to force the company to pay additional fines for non-compliance with the merger conditions. (See New York State Tells Charter to Get Out.)

Arguing that the company has "a very strong legal case," Rutledge insisted that Charter has lived up to commitments under the PSC's merger approval and has actually exceeded the buildout and speed targets set by the Commission so far. "We are well ahead of our obligations," he said.

Rutledge blamed the dust-up with the state at least partly on "politicalized" labor issues in New York City, where the company has been battling with the International Brotherhood of Electrical Workers (IBEW). The IBEW's Local Union No. 3, which represents 1,800 Charter workers, has been on strike for more than a year because it says the company wants to eliminate numerous employee benefits, such as pension contributions and personal days.

At least one industry analyst, New Street Research's Jonathan Chaplin, views the PSC's actions as part of the state's "aggressive negotiating strategy" with Charter but doesn't believe it will lead to anything drastic. Other observers have suggested that it's part of a move by New York Gov. Andrew Cuomo (D) to secure support from labor unions and the left in his re-election battle.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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