Charter co-CFO resigns; quarterly loss widens

ST. LOUIS -- Charter Communications Inc., the nation's third-biggest cable television system operator, said Tuesday its fourth-quarter loss widened to $340 million, citing higher programming and service costs, increased interest expense and a lower income tax benefit.

The company, which is controlled by Microsoft Corp. co-founder Paul Allen, also announced its co-chief financial officer, Derek Chang, will step down in April.

The St. Louis-based company said it lost $1.12 a share for the three-month period ending Dec. 31 compared with a loss of $58 million, or 20 cents a share, a year ago. The losses reflected payment of preferred dividends in each quarter.

Analysts surveyed by Thomson First Call expected losses of 93 cents per share for the latest quarter.

Revenue rose to $1.28 billion, up 5 percent from $1.22 billion on growth in high-speed data revenue as well as increased commercial revenue and advertising sales.

During the final three months of last year, Charter lost 83,100 basic video and 14,200 digital video customers but gained 64,500 residential high-speed data and 5,200 telephone service customers.

Charter shares fell 11 cents, or 6 percent, to close at $1.72 on Tuesday on the Nasdaq stock market, near their 52-week low of $1.52.

Charter offered no explanation for the resignation of Chang, who the company said will resign April 15 as co-CFO and executive vice president of finance and strategy, with overall responsibility for treasury and mergers and acquisitions.

During a conference call with analysts, Chang gave no specifics about his leaving, saying only that he was grateful for the opportunities at Charter and "I certainly wish everyone here the best."

Robert May, Charter's interim chief executive and president, told analysts that "we appreciate Derek's efforts on behalf of the company, and we'll miss his contributions."

May said he expected to fill the CFO vacancy by the end of March and hoped to have a new chief operating officer perhaps by April. He said he could offer no time frame on selecting a new CEO, saying that was in the hands of a search committee.

Chang was tapped last summer to temporarily share the role of CFO with Paul Martin, filling a vacancy created when Michael Huseby left to take a similar job at rival Cablevision Systems Corp.

Chang's resignation signals the latest in a management shuffle in the executive suites of Charter, where chief executive and president Carl Vogel resigned in January in the wake of big losses in 2004 and the company's debt, which Charter said Tuesday had swelled to $19.5 billion as of Dec. 31.

Vogel, who also gave up his seat on Charter's board, was replaced on an interim basis by May, a Charter director who heads the rehabilitation services company HealthSouth Corp.

Also in January, Charter parted ways with chief administrative officer Steven Schumm after eliminating his position without public explanation.

Schumm, who had been with Charter since 1998, served as its interim CFO from December 2002 to January 2004, assuming that role after Kent Kalkwarf was fired in connection with an accounting scandal that eventually produced federal fraud charges against Kalkwarf and three other one-time executives.

Kalkwarf, former chief operating officer David Barford and the two others accused have pleaded guilty to and await sentencing on federal charges related to a scheme to dupe investors by inflating subscriber numbers.

Schumm and Chang were not accused of wrongdoing.

A.G. Edwards & Sons Inc. analyst Mike Kupinski called Charter's latest earnings a mixed bag, with slightly better-than-expected operational numbers offset by a double whammy -- continued erosion in Charter subscribers and the departure of Chang, whom Kupinski called well-respected on Wall Street.

"The company lost over 83,000 basic subscribers for the quarter, and we were among the highest on the street with (estimated) losses of 55,000," Kupinski said. "It seems like it accelerated in the fourth quarter, and that's discouraging."

May told analysts Charter intended to ramp up focus on customer retention in the face of "significant competition."

"Our employees know and realize the customer has a choice in terms of doing business with us, satellite, the phone company or the video store," May said. "This said, we'll give them a reason to choose us. We'll make the customer aware that our services are superior but also that as customers they come first."

For the year, Charter lost $4.35 billion, or $14.47 a share, versus a loss of $242 million, or 82 cents a share, a year ago. Revenue rose to $4.98 billion from $4.82 billion a year ago. It lost 209,000 analog and gained 86,100 digital video customers for the year.

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On the Net:

Charter Communications Inc., http://www.charter.com