Charter fires top execs, cites criminal probe

Reuters | December 23, 2002 | Derek Caney

[HAL9000]

NEW YORK, Dec 23 (Reuters) - Charter Communications Inc., the focus of a federal grand jury probe of its accounting practices, said on Monday it fired two top executives at the No. 3 U.S. cable television operator.

Chief Financial Officer Kent Kalkwarf will be replaced on an interim basis by Chief Administrative Officer Steven Schumm. Chief Operating Officer David Barford, who was placed on paid leave in October, will be replaced by Maggie Bellville, who joined Charter earlier this month as executive vice president of operations.

Efforts to reach Kalkwarf and Barford were unsuccessful. Charter, which is controlled by Microsoft Corp. co-founder Paul Allen, is facing a grand jury investigation of how it accounts for its subscribers. In recent weeks, the U.S District Attorney's officer for the Eastern District of Missouri has begun investigating how Charter accounts for subscribers who do not pay their bills.

"The terminations of Barford and Kalkwarf follow a review by the company of various matters, including those relating to the previously disclosed grand jury investigation," the company said in a statement.

The U.S. Attorney's office advised the company that no member of its board of directors, including Chief Executive Officer Carl Vogel, is a target of the investigation. The company is cooperating with the investigation.

Charter's shares rose 3 cents to $1.16 in Nasdaq trading. The company said last month it would restate and re-audit its financial results for 2000, 2001 and the first two quarters of 2002, after understating costs and tax liabilities related to acquisitions in 1999 and 2000.

The audits are expected to be completed in the first quarter of 2003.

Charter said at the time that the restatements would have no impact on revenue and operating cash flow, the measurements of performance preferred by cable companies.

It said its fourth-quarter operating cash flow would fall short of its target announced in early November of 4 percent to 5 percent growth, assuming the same portfolio of assets in both years. It also said its revenue growth rate would be at the low end of its earlier target of 8 percent to 9 percent.

Operating cash flow excludes depreciation, amortization and other charges associated with acquisitions and upgrades of its cable systems to compete with satellite television. Charter has been losing subscribers as a result of aggressive competition from satellite TV services like Hughes Electronics Corp.'s DirecTV and EchoStar Communications Corp.'s Dish Network. While other cable companies have also lost market share to satellite, Charter has suffered more acutely because its cable systems are in less urban areas, where satellite is a more viable competitor.

Charter has also been punished by Wall Street for being one of the most leveraged cable companies, with $18.5 billion in long-term debt on its balance sheet as of Sept. 30.

Charter said it would appoint a corporate compliance officer as part of a program that will include a compliance hotline and the adoption of an expanded code of conduct.

Copyright 2002, Reuters News Service

[The Duke]

Anybody ever notice how the CEO always seems to be innoculated against any consequences? Or is it just me?

[agitator]

Another thing these weazels at Charter are doing to cover their butts is reducing service levels without telling anybody. At the end of January, they're finally getting to me. After having 1.5m-down / 768k-up service since the day it was available, they're reducing the outbound bandwidth to a useless 128k (-80%) and have no intention of telling me about it while leaving the price the same (I found out what the plan is on my own). I told their commercial division (they had already silently screwed their commercial customers, the most profitable section of their business) that I would be pulling all of my commercial network people off of cable because their 128k outbound was useless and they proceeded to lie to me that they would be upping all the commercial people to 384k outbound in 30 days (which was 90 days ago).

Let's see, "we're taking a big stock hit because of shady accounting so let's make up for it by screwing the customers out of 40% of their service without telling them."

Nice going Charter. Before January, I'll be using DSL and you lying sacks of ____ can take your alleged broadband and shove it.