In awarding $6.5 million for Charter Communications Inc. to move its headquarters to Stamford, Gov. Dannel P. Malloy cemented the city”™s status as a center for the TV and digital industry ”“ if doing so via a company that would represent among the biggest excesses of the telecom bubble of the late 1990s.
Famed for its sale to Microsoft Corp. co”“founder Paul Allen ”“ and its subsequent bankruptcy just a few years ago that wiped out much of his investment ”“ Charter remains today the fourth largest cable television company in the nation, if one that has seen more success of late with its Internet and voice products than its mainstay video offerings.
Charter”™s arrival fills a void left by Time Warner Cable Inc., after the company moved its headquarters from Stamford to New York City on the eve of its 2007 initial public offering of stock. Stamford remains the corporate headquarters of Frontier Communications Corp., the largest telecommunications provider in the nation focused on services to rural regions.
Under former Time Warner Cable and Cablevision executive Tom Rutledge, who lives in New Canaan, Charter will plot its course from its new headquarters in 70,000 square feet of space at 400 Atlantic St., which is leasing up as UBS and American Express Co. wind down their own offices in the building. Rutledge said some 70 people would move to Stamford from St. Louis; as reported by the Fairfield County Business Journal the day before the Malloy announcement in early October, Charter was already recruiting for dozens of local positions on the job board of Stamford-based Indeed.com.
“We wanted to move to the New York metropolitan region because we thought that the area was good for us for a lot of reasons, particularly transportation (and) access to other media companies,” Rutledge said. “It”™s good to be in a place where you can have the contacts with other businesses which will allow your business to be creative and thrive and grow.”
Rutledge has had less than eight months to get his bearings as CEO of Charter. In the first half of 2012, Charter lost $177 million as revenue rose 5 percent to $1.9 billion. The company has been adding voice and Internet customers this year, but losing video subscribers, with the recession”™s impact on household budgets the primary culprit.
“Our previous strategy and our results have created a lot of data-only relationships in Charter,” Rutledge told investors in August. “We have almost one million of those relationships, and so the opportunity to sell them other products has always been a part of our strategy. ”¦ Even larger than that is the unsold (cable) ”˜passings”™ universe and the satellite subscriber base that exist inside that universe.”
Founded in 1993 in St. Louis by cable industry veteran Howard Wood and two colleagues, in 1998 Microsoft co-founder Paul Allen spent $4.5 billion to acquire the company in one of the ballyhooed deals of the dot-com era, with the Allen investment unleashing multiple new acquisitions throughout the Southeast and Midwest, including deals to pick up subscribers in Connecticut.
Charter went public in 1999 at the peak of the telecommunications bubble, with the company raising $3.5 billion in the IPO. A breakneck pace of acquisitions and cable-system swaps would finally catch up with the company, however, with Charter declaring bankruptcy protection in 2009 and a judge ultimately approving a plan that saw Allen”™s stake squeezed down to a 35 percent share.
Allen is now in the process of selling off the large portion of his remaining shares of Charter Class A stock, as are affiliates of New York City-based Apollo Management L.P.
Of nine companies to receive First Five or Next Five incentives from the Malloy administration in exchange for adding at least 200 jobs in Connecticut, Charter is the only one to have undergone a bankruptcy restructuring.
With Malloy fresh off a controversial decision to award the wealthy hedge fund Bridgewater Associates L.P. $115 million to move its headquarters from Westport to Stamford, Charter will get $6.5 million to outfit its own offices.
“This is one of the things that fits our sweet spot and is one of the things that we decided to go after, and that is communications and digital communications in particular,” Malloy said. “The proximity to New York is a great selling point; the lower tax rate than New York is a great selling point.”
