Another exec exits as Charter's loss widens
NEW YORK — Billionaire Paul Allen’s struggling cable company Charter Communications saw its loss widen to $339 million in the last quarter as more customers bolted and operating costs jumped.
And in another management shake-up, cabler also announced during Tuesday’s earnings call that interim co-chief financial officer Derk Chang will ankle April 15. No replacement was named, nor were the reasons for Chang’s departure elaborated upon.
News followed the resignations of Charter CEO-prexy Carl Vogel in January, and not long before him CFO Mike Huseby and chief operating officer Maggie Bellville.
Earnings report, coupled with Chang’s pending departure, sent company’s already pummeled stock down in trading. Shares closed at $1.72, a 6.01% decline.
The St. Louis-based Charter, which is controlled by Allen, lost 83,000 basic cable subscribers and 14,200 digital cable subs in the final three months of 2004.
Going after the rich
Charter exec VP of operations Mike Lovett conceded the customer drop-off was greater than expected, but said the company reduced and fine-tuned its marketing budget to target more affluent customers.
Strategy appears to have paid off. Cabler added 64,500 Internet customers and 5,200 phone subs, boosting revenue from high-speed data by more than 30%. And in another bright spot, ad revenues were up by 12%.
Charter in particular has been hit hard by competish from satcasters.
Wall Streeters looked for some sign during the earnings call that Allen would step in and rescue the cabler.
“Based on all the time I have spent with Paul, he is not only committed to the business, he is also very passionate about the business. And sometimes I believe that his passion about the business sort of gets misrepresented,” said Charter interim chief exec Robert May.
The $339 million loss equated to $1.12 per share compared with a loss of $58 billion, or 20¢ a share, in the same quarter in 2003. Total revenue rose to $1.28 billion in the last quarter, up nearly 5%.
Operating income, however, fell steeply from $178 million to $108 million, a 39% decline. Part of the hit came from increased depreciation and amortization expenses, an asset sale loss and an $49 million interest expense and
Operating expenses were higher than expected, due to an 8% hike in programming costs.
Charter had $19.5 billion in outstanding debt at the end of 2004.