Charter CEO Interested in ‘Wisely’ Acquiring Subscribers

Charter Communications Inc., the U.S. cable company that lost out to Comcast Corp. in its bid to buy Time Warner Cable Inc., is “still interested in wisely acquiring subscribers,” Chief Executive Officer Tom Rutledge said.

Rutledge made the remarks on a conference call today after Charter posted its first quarterly profit in more than three years. He declined to comment specifically on Comcast’s $45.2 billion agreement to buy Time Warner Cable.

Rutledge, who joined Charter last year, envisioned expanding the the fourth-largest U.S. cable company through acquisitions and offered to buy Time Warner Cable for $37 billion. The bid was rejected as too low by CEO Rob Marcus. Charter is now considering buying some of the 3 million subscribers Comcast plans to sell following the acquisition, according to a person familiar with the matter.

Charter fell 5.1 percent to $125.08 today, the biggest drop since Feb. 13, when the Comcast deal was announced.

Investors were concerned by the higher capital spending of about $2.2 billion that the company projected for this year, according to Craig Moffett, founder of research firm MoffettNathanson LLC.

Stock Pressure

“That’s putting some pressure on the stock,” he said in an interview. “The earnings results are actually pretty good.”

Fourth-quarter profit of $39 million compares with a loss of $40 million a year earlier, the Stamford, Connecticut-based company said today in a statement. Sales rose to $2.15 billion, compared with the $2.16 billion predicted by analysts on average, according to data compiled by Bloomberg.

In addition to buying customers from Comcast, another possibility for Charter is merging with Cox Communications, a closely held firm that ranks behind Time Warner Cable in subscribers. Cox and Charter held talks last year about a possible merger, people familiar with the matter said last August.

Billionaire John Malone bought a 27 percent stake in Charter last year through his holding company Liberty Media Corp. as he sought to consolidate the cable industry.

Charter, like most cable operators in the U.S., has relied on broadband service to fuel its growth. Charter had 4.38 million Internet customers as of Dec. 31, a 2.2 percent gain from the third quarter. It also reported 4.177 million video subscribers, a loss of 2,000 customers from the previous quarter.

The company acquired Bresnan Broadband Holdings LLC in July for $1.63 billion, which helped add 63,000 residential customers and 16,000 commercial subscribers in the quarter.

(Updates with closing share price in fourth paragraph.)
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