NEW YORK — Carl Vogel resigned Tuesday as chief executive of Charter Communications, Microsoft co-founder Paul Allen’s financially troubled cable company.
News was hardly a surprise on Wall Street but nevertheless sent Charter stock tumbling 6.34% to close at $1.92. Earlier during the session, stock hit a 52-week low of $1.87.
Charter said the decision leading to Vogel’s departure was reached mutually. Company’s board said it has formed a search committee to begin looking for a permanent replacement.
In the meantime, board director Richard P. May, who is chair of rehab services conglom HealthSouth, will serve as interim CEO.
During an ayem conference call, May said Charter — which is carrying an industry-high debt load of $18.5 billion — must restore its good name.
“You need to have huge amounts of credibility with your customers that you know what you’re doing and that you’re doing it well. That’s key to any business, but especially when you’re delivering communications,” May said. “I think over the recent past we have not always lived up to that expectation.”
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Allen said the temporary appointment of May, who is credited with helping HealthSouth begin to recover from financial crisis, ensures leadership and stability.
Vogel, who arrived to run Charter in 2001, will remain on for the next month to help with an orderly transition. He is the third top exec to leave Charter in the past year. Chief financial officer Mike Huseby left in the summer to serve at Cablevision Systems, and chief operating officer Maggie Bellville quickly followed.
While the cable biz in general saw a lean 2004, Charter’s losses were hefty. Company also was still reeling from the 2003 indictment of four execs on charges of defrauding shareholders and inflating subscriber rolls.
Legal trouble led to Justice Dept. and Securities and Exchange Commission investigations into Charter’s past financial procedures. Company agreed to pay $144 million in cash and stock to settle shareholder lawsuits.
Charter lost $4 billion in the first three quarters of 2004 after taking writedowns to reflect the diminished value of the business.
Company revealed it was carrying the $18.5 billion debt load during its third-quarter earnings call in early November. It said it will require additional funding for debt that comes due this year and in 2006.
Charter has indicated that Allen won’t reach into his deep pockets and rescue the company from its financial woes. Wall Streeters, however, still wonder whether Allen will make such a move.
In 2004, Charter also saw huge bites taken out of its business by satcasters, in particular Rupert Murdoch’s DirecTV. Charter lost 58,600 subs to satcasting in the third quarter of 2004 alone and 164,400 the previous year.
Analysts tracking the cable biz say Charter continued to lose customers in the final quarter of 2004.
Company, the country’s fourth-largest cable operator, has roughly 6.3 million cable customers.