More Charter woes-reports even wider losses


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Posted by The Banker on March 16, 2009 at 14:43:21:

Charter reports wider loss to end 2008
Associated Press 3/16/2009 1:02 pm

Charter Communications Inc., the nation's fourth-largest cable operator, said Monday its loss for the fourth quarter widened from a year ago and one of its subsidiaries, CCH II LLC, will not make a scheduled interest payment on some of its debt.

Charter, which is controlled by Microsoft Corp. co-founder Paul Allen, previously announced plans to file a prearranged Chapter 11 bankruptcy by April 1. Charter has been skirting insolvency for years, but this time it faces a brutal combination of tight credit and billions of dollars of debt coming due.

The St. Louis-based company, which is the dominant subscription TV provider in the Madison area, hasn't recorded a profit since it went public in 1999.

For the period ended Dec. 31, Charter said its loss climbed to $1.5 billion, or $3.96 per share, compared with a loss of $468 million, or $1.27 per share, a year earlier.

The company said its most-recent results included a $1.52 billion impairment charge.

Revenue grew 6.6 percent to $1.66 billion from $1.55 billion, mainly driven by growth in its phone and high-speed Internet services.

Charter could have posted a profit for several quarters if it weren't hampered by high interest payments on its massive debt. In the fourth quarter, it paid $486 million interest.

Adjusted earnings before interest, taxes, depreciation and amortization came to $620 million in the quarter, up 10 percent. The figure excludes the impairment charge and other one-time items, as well as stock compensation expenses.

Charter's business has improved, especially after the introduction of phone and Internet service, as well as its entry into the small and medium-size business market. Digital TV and the popularity of high-definition programs also helped the business.

"Operationally, the company continues to perform according to expectations," said Moody's Investors Service analyst Russ Solomon. While it didn't post a robust quarter, Charter continues to show "improving trends that has been noted over the last couple of years."

The number of basic video subscribers fell in the quarter by 75,100, a trend seen by other cable operators, and digital subscriber rolls grew, albeit at a slower pace than in the prior year -- up 22,300 compared with an increase of 59,500.

High-speed Internet signups were up 22,900 compared with 50,500. Phone service growth was halved to 75,200.

The average monthly revenue received from subscribers rose by 10 percent to $108.27, boosted by subscriptions to advanced services, more expensive tiers and bundled packages of video, Internet and phone service.

"Our success in growing the bundle, even in a challenging economic environment, demonstrates our competitive position in this industry," CEO Neil Smit said in a statement.

The company has been struggling with debt, however. It said that subsidiary CCH II LLC will not make an interest payment scheduled for Monday on certain senior notes. Charter says it plans to file for Chapter 11 before the end of the 30-day grace period allowed on the payment.

Charter had about $21.7 billion in total debt as of Dec. 31.

Last month, the company said it had reached an agreement in principle with holders of $8 billion in debt who will give up repayment of their debt. In return, they will receive common shares, or warrants for rights to get common shares, that translate to nearly owning the entire company after bankruptcy.

In a prearranged bankruptcy, a company enters into reorganization with a plan to emerge that has the approval of major stakeholders. The rest of the creditors will be dealt with through bankruptcy court. In a prepackaged bankruptcy, each creditor has voted on the plan before the filing.

Charter posted a full-year loss of $2.45 billion, or $6.56 per share, compared with a loss of $1.62 billion, or $4.39 per share, in 2007.

Full-year 2008 sales climbed to $6.48 billion, up 7.9 percent from $6 billion, in 2007.


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