Charter Communications is the second largest cable operator in the United States. The history of Charter Communications includes early financial struggles before emerging in recent years as the second largest company of its kind. Here’s a look back at its history.
The History of Charter Communications begins at Cencom Cable
Charter Communications had its origins with Cencom Cable, a cable operator in St. Louis founded in 1981. In 1985, Cencom merged with Storer Cable. Then in 1991, Cencom sold out to Hallmark Cards for $1 billion.
In January 1993, Cencom’s former managers, Barry Babcock, Jerry Kent and Howard Wood, founded Charter Comminications in St. Louis. Later, in 1995, Charter bought controlling interest in Crown Media, the former Cencom Cable, for $300 million.
In 1997, Charter reached one million subscribers.
Charter began life as a cable television operator. It started offering high speed Internet service in 1997. Phone service followed in 2004.
Enter Paul Allen
Microsoft cofounder Paul Allen bought controlling interest in Charter in July 1998 for $4.5 billion. Allen merged Charter with Marcus Cable, which he had controlled since April 1998. After negotiations, Charter executives retained management of the new combined company. Charter lost $535 million that year on $2.7 billion in revenue.
In his 2012 autobiography, Allen called it a pivotal opportunity. In 1998, most Internet connections still happened over dialup. Expansion into high-speed Internet and telephone service was just a matter of time. Cable-based Internet offered speeds of 4-5 megabits at the time. Meanwhile, dialup could only reach 56 kilobits and DSL could reach 256-512 kilobits.
Charter made 11 acquisitions in 1999-2000. The acquisitions made Charter the fourth largest cable operator in the United States. It went public in November 1999, raising $3.2 billion in its IPO.
However, by mid-decade, Charter’s debt obligations made it difficult for the company to turn a profit and it got into trouble for its accounting practices. In April 2003, Charter said it had overstated its revenue and cash flow for 2000, 2001 and the first three quarters of 2002. Charter had $18 billion in debt in 2005 but a net worth of only $600 million.
After flirting with bankruptcy several times and nearly getting delisted in 2008, Charter filed for Chapter 11 bankruptcy in February 2009. With $21.7 billion in debt, it was the largest so-called “prearranged bankruptcy” in history at the time. In a preearranged bankruptcy, it negotiates a reorganization plan ahead of filing. Charter was the third largest cable company in the United States at the time.
In November 2009, it emerged from bankruptcy over many of its creditors’ objections to its bankruptcy plan. Paul Allen retained a 35 percent voting stake in the company, but lost about $7 billion in the deal. In September 2010, Charter returned to NASDAQ under the symbol CHTR.
Move to Stamford, Conn.
In 2012, Charter moved its corporate headquarters from St. Louis to Stamford, Conn., to better facilitate deals with other cable operators, most of whom were headquartered on the eastern seaboard. It kept most of its operations in St. Louis and Denver. Its former headquarters at Manchester Road and Interstate 270 in Town and Country, Missouri, remains in operation as office space.
By 2012, Charter had five million customers. In a rapidly consolidating industry, that was good enough for fourth place at the time.
Bright House Networks
In March 2015, Charter announced a $10.4 billion deal to acquire Bright House Networks, a cable operator in the southeastern United States. This deal slipped under most people’s radar, however, as two companies’ efforts to acquire Time Warner Cable overshadowed it.
Bright House, the sixth largest cable operator in the United States, had 2.2 million customers. Former Bright House customers complained that Charter wasn’t any better than Bright House had been.
Time Warner Cable
Charter attempted four times to merge with Time Warner Cable, the second largest cable operator in the United States, including in 2013 and 2014. At the time, Charter had about 4 million subscribers to Time Warner Cable’s 11 million. Time Warner Cable was large but troubled. Its customer service made it a perennial contender in The Consumerist’s annual Worst Company in America contest.
In 2014, its much larger rival, Comcast, outbid Charter. The United States Department of Justice filed suit due to antitrust concerns. On April 24, 2015, Comcast abandoned the merger plan.
In May 2015, Charter and Time Warner Cable announced a merger deal that ultimately ended up being worth $55.1 billion. About a year later, the FCC approved the deal. Charter’s tie-up with Time Warner Cable and Bright House Networks made it the second largest cable operator and third largest pay-tv operator in the country, with 24 million customers in 41 states. Comcast, the largest cable operator, had about 27 million customers. AT&T remained the second-largest pay-tv operator.
In 2017, the combined company ranked #96 on the Fortune 500 list. Former Time Warner Cable customers weren’t thrilled with the merger. Charter gave better customer service, but quickly raised prices.
Charter Communications stock price history
In December 2010, Charter stock was worth $38.94 per share. It’s done pretty well since then.
- Jerry Kent (1990s-2001), left after falling out with Paul Allen
- Carl Vogel (2001-2005)
- Robert May (2005)
- Neil Smit (2005-2010)
- Michael Lovett (2010-2012)
- Tom Rutledge (2012-)