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Businesses Communications

Charter Files For "Prearranged Bankruptcy" 82

Posted by Soulskill
from the down-but-not-out dept.
jamie points out news that Charter Communications filed for "prearranged" Chapter 11 bankruptcy on Friday, primarily to reorganize some of the $21.7 billion in debt it has accrued. Quoting: "The St. Louis-based company seeks to emerge from bankruptcy as early as the end of summer and doesn't plan on selling any of its assets to competitors. After Chapter 11, interest costs at Charter, which has never posted a profit since going public in 1999 due to massive debt interest payments, will be cut in half to $830 million a year. The filing restructures about $8 billion of debt at Charter, which is controlled by Microsoft Corp. co-founder Paul Allen, but leaves about $13 billion of debt on its books. Allen will control 35 percent of the votes in the reorganized company. In the bankruptcy, Allen's 51 percent equity stake in the cable operator will be wiped out, along with shares of other stockholders. Allen also holds some debt and preferred stock."
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Charter Files For "Prearranged Bankruptcy"

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  • 13 billion!!!! (Score:1, Insightful)

    by Anonymous Coward

    How can a company be allowed to get 13 BILLION into debt!

    • by Skapare (16644)

      Loans. A lot of stupid loans.

    • by XPeter (1429763) *
      How can Bernard Madoff be allowed to run a 60B+ ponzi scheme?
    • Re:13 billion!!!! (Score:5, Insightful)

      by PopeRatzo (965947) * on Saturday March 28, 2009 @04:14PM (#27372535) Homepage Journal

      How can a company be allowed to get 13 BILLION into debt!

      Because our brand of capitalism is based on borrowed money.

      Just about every company who employs more than 100 people is borrowing money daily in the commercial paper market just to pay its vendors and employees.

      That, coupled with the notion that there has to be constant, accelerating growth, that having a company that makes a profit and employs people that are happy just isn't enough, and you get a system that's made of borrowed money and workers who are exploited.

      One bright spot in this recent economic turmoil is that more people are learning a lot of surprising things about the way our "free-market capitalist" system really works. More of them are realizing that it's not "the immigrants" or "the blacks" or "Wall Street" or even "the government" that is destroying our way of life, it's something a lot more systemic.

      • One bright spot in this recent economic turmoil is that more people are learning a lot of surprising things about the way our "free-market capitalist" system really works. More of them are realizing that it's not "the immigrants" or "the blacks" or "Wall Street" or even "the government" that is destroying our way of life, it's something a lot more systemic.

        Yeah, it's showing us that badly managed businesses will fail, see Charter. It has also showed me at least, that when the government starts to step in and hand out bailouts and stimulus, that things only get worse. Especially no strings attached stimulus. People are surprised that AIG is doing what they want with the money that was given them without any checks? I'm not. I don't blame AIG, I blame "the government" (both the old and new) for giving them any money in the first place.

        • by PopeRatzo (965947) *

          I don't blame AIG, I blame "the government"

          Since, here in the US, the "government" is us (remember "by, for and of.."?) then we have only ourselves to blame.

          See, the thing is, with our system, if we don't like something the government is doing, we have an opportunity to make a change. That is not so with corporations. As many of us have learned first hand, if there's something a big corporation does that we object to, there's little to nothing we can do about it, especially when the corporation, such as

      • by Travoltus (110240)

        I just wanted to say.. your post is absolutely epic. Good show!

  • by FlyingSquidStudios (1031284) on Saturday March 28, 2009 @12:15PM (#27370521) Homepage
    A financial setback like this might cause him to lose a house... Imagine being fourth homeless...
  • by bunyip (17018) on Saturday March 28, 2009 @12:22PM (#27370559)

    I was a cable internet customer, with Charter, for several years. It was flaky and crapped out at least once a month, and their service sucked. THey completely rewired my lot twice, each tech saying that the previous tech used the wrong cable, or just somehow did it all wrong. Can't say I'm sad to see Charter suffer.

    Currently have FiOS, the 15 Mbit download is pretty cool. Only had one minor problem and their support was good, and called back to make sure I was satisfied with their service.

    Hope this doesn't sound like a rant - but when we went over to the fiber optic service, the tech told us that Charter and other cable companies were driving a lot of frustrated people over to them.

    Alan

    • by Mousit (646085) on Saturday March 28, 2009 @12:53PM (#27370747)
      Hell, some people were lucky if they even got shitty service. My grandmother's really getting into the whole technology thing with gusto, and was after HDTV and high-speed internet. Guess what? Charter did not offer either option to her entire town (a close-in, well-established suburb of Dallas). In fact, they had no plans to EVER offer either one in "that market" as they put it. Suddenly I realized why so very, very many houses around there had sprung up satellite dishes.

      She even went up to the Charter office, and the girl that she talked to there actually said she was telling customers to get satellite. So that's what my grandmother did. She'd been a Charter customer literally since they became available in her area, even before they ever went public. Decades. Not anymore. She's a happy DirecTV customer now, with all her HDTV and her DVR. Loving it.

      She got AT&T DSL too, not the greatest choice but it's pleased her.

      Looking around at all the other dishes in the area (a lot of them are DISH network, I notice, which is owned by AT&T, so probably a lot of DSL customers too), it's not at all hard to see that Charter is hemorrhaging customers in that market, and I have little doubt that it is by far not the only place where they're making such stupid, asinine decisions that are forcing customers to leave them in order to get the service they clearly want.
      • Re: (Score:2, Informative)

        by Anonymous Coward

        Looking around at all the other dishes in the area (a lot of them are DISH network, I notice, which is owned by AT&T, so probably a lot of DSL customers too)

        No, it isn't. DISH Network Corporation is its own publicly traded company, spun off from EchoStar Communications, which is the one that owns the fleet of satellites.

      • by afidel (530433)
        The situation you described is EXACTLY why local franchise agreements are good and statewide universal franchise agreements are very bad. If there is sufficient demand for those services and the incumbent provider refuses to offer them then the city simply amends the franchise agreement at the next renewal to require those services to be offered by a certain date, if Charter fails to meet that obligation then they lose their monopoly in that community. I know that was the only reason the last place I lived
    • Re: (Score:3, Informative)

      by leamanc (961376)
      I see a lot of Charter bashing, I thought I'd put in my two cents in the interest of opposing viewpoints. I live "in the sticks" in Missouri, at the very tail end of what they consider the "St. Louis region." In fact, I'm in the farthest town they service. The rates are very good for my area, and the service has been better than anything else I've tried. I've had to have my cable modem replaced twice in five years, and suffered a couple of outages after big storms. Other than that, it's been great. Wh
    • Re: (Score:3, Interesting)

      by Anonymous Coward

      As an employee of Charter Communications I resent your stance that you're glad anyone is in financial hardship. I can attest through my own observations and experiences that there is flaws in the customer service side. Since Charter outsourced their customer service department to "Convergsys" and "Teletch" based in locations such as the Phillipeans, the customer service quality has plummeted. The outsourcing companies undertrain their employees and the reps are not armed with much knowledge to properly r

      • Re: (Score:3, Interesting)

        by Ilgaz (86384)

        As I post this, I upload a file to my friends ftp server all the way to California from Europe with my max upload speed, there is no "optimisation" or anything on both boxes either. One system is OS X Leopard and other is NetBSD.

        I can't say anything bad about a service like that as distance really matters between residential connections, especially when they have to pass 30-35 hops. If I moved to California, my service would really be charter.

        I can't understand what kind of "phone support" people get from a

      • it IS their service (Score:3, Informative)

        by Velex (120469)

        Dear Sir or Madam,

        Where I live I currently have two options for broadband: slow DSL (512 kb up/2 Mb down on a good day) or slow Charter cable (768 Mb up/6 Mb down). I currently have DSL installed. Do you know why?

        Firstly, let me inform you that the answering service I dealt with during the incident I describe was located in St. Louis, MO, not in the Philippines.

        Last summer I was using Charter's cable service. It was flakey at best. One day there was a bad storm that resulted in major flooding in town.

    • by Teckla (630646)

      I was a cable internet customer, with Charter, for several years. It was flaky and crapped out at least once a month, and their service sucked.

      Minnesota-based ex-Charter Pipeline customer here. I subscribed to Charter Pipeline for about one year. About half a dozen to a dozen times per day, all my connections (AIM, telnet, whatever) would drop. traceroute would show packets looping in their system. By the time I got through to customer service, and went through their "reboot your PC, blah blah blah" script, it would be fixed, and customer service would tell me they didn't see anything wrong with my connection.

      That, combined with constant latency p

  • That works out to about $481 of debt per customer.

    • Oops, wrong number (Score:4, Interesting)

      by Skapare (16644) on Saturday March 28, 2009 @12:30PM (#27370605) Homepage

      They only have 5.5M customers. So $2363 of debt per customer. How long will it be to pay THAT off?

      • Re: (Score:3, Funny)

        by Anonymous Coward
        It's ok, for the first 6 months, they can pay an introductory rate of only $19.99/month
      • by pmarini (989354)
        you have to add to that the money that they got paid by the customers for their services, let's assume $500/year for 10 years = $5000 (per customer), so the grand total would be $7363 per customer thrown in the air (the money, not the customer)
    • by spade2k (863371)
      RTFA, Charter has no where near 27 million subscribers, try 5.5 million.
  • by NoodleSlayer (603762) <ryan AT severeboredom DOT com> on Saturday March 28, 2009 @12:37PM (#27370655) Homepage
    As a former Charter customer all I can say is that they should just sell off all that company's assets wholesale. There's a reason why this company is hemorrhaging money, it's not just because of their massive amounts of debt, it's the crappy way they treat their customers.

    Charter's customer service made me long for Comcast's we-only-mildly-screw-you service. There was an entire MONTH where Charter in San Luis Obispo didn't know how to configure their damned routers so there was massive lag spikes (~2min lag spikes every 5 or so min) and about 300ms of lag when you weren't in a lag spike. They managed to get it set up in such a way that no one could directly log into AIM (it was possible through services like meebo) and if you called customer service they would first try to tell you that your computer was broken, and then that it was a "DNS issue."

    They forced these miserable Moxi boxes on everyone about a year before they were available at retail. Moxi is another one of Paul Allen's ventures, and in short they were using Charter's customers as beta test guinea pigs. Even the sales people in Charter's regional office were blasting those damn things calling them "pieces of shit" in front of the customers!
    • by DarkOx (621550)

      I used to live in a small town in NC. Because of the mountains it was pretty much impossible to get any tv without a roof top arial. Even with that you could pretty much count on not being able to get more then one channel ( and then badly ) in a given orientation. There were three channels that you could get OTA if you worked hard enough at it. So you either got a motorized system to manipulate the roof top arial or you got cable. The phone compan was actally a little local Mom and Pop. They were nic

    • Re: (Score:3, Insightful)

      by Renraku (518261)

      The more companies that drop out of a particular market, the more the remaining companies will try to screw you.

      Look for a massive hike in price at Comcast in the coming months. Either a price hike, tightening of the bandwidth cap, both, or something else that shows how important competition is.

      • by toddestan (632714)

        I'm not so sure of that. How many places exist where you have a choice between Comcast and Charter? Comcast computes against the local phone company, satellite, and FIOS (where available), not Charter.

    • As a former Charter customer all I can say is that they should just sell off all that company's assets wholesale. There's a reason why this company is hemorrhaging money, it's not just because of their massive amounts of debt, it's the crappy way they treat their customers.

      Of Course ! Charter let's you know right from the start that the customer doesn't mean crap to them. Before you can even start an account with Charter they let you know that they do not trust you, and that they can break federal laws before they open your account. They do this by insisting that you provide your social security number and running a credit check on you to see if you are worthy of their service. Last I knew, it was against federal laws to insist on obtaining ones social security number before

  • by geoffeg (15786) <geoffeg@TEAsloth.org minus caffeine> on Saturday March 28, 2009 @01:09PM (#27370797) Homepage

    I know a lot of comments here are going to be about their horrible customer service, unreliable network problems, etc. I know cause I've heard a lot of friends' (in St. Louis, where I live) horror stories. Maybe I'm the only customer that has been pleased with their services. Calling customer service has always been surprisingly pleasant and my issues resolved impressively quickly.

    AT&T's U-verse just became available in my area (when I moved here cable was the only option for high-speed internet, DSL didn't reach this far) but I really do not want to deal with the pain of switching my TV, DVR, internet and phone over to a different company. I already give AT&T too much money each month for my cell phone.

    Charter has done good by me (so far), they're a local company and I hope they come out of this stronger. Options and competition are a good thing for the kinds of services they offer.

    • My Dad lives out in Lake St. Louis. He's stuck with his choice of CenturyTel and Charter. A few years ago he had Charter Telephone service, but no cable or high-speed internet. The calls were crystal clear and even the dial up had a better connection back in the day. Two years ago he switched to a CenturyTel bundle, but their DSL service was horribly slow. It was so bad that in when I was at his house for Christmas, my 3G speeds on my iPhone was faster than his DSL connection.

      So he switched to Charter

    • I recently went from Verizon's DSL to Charter.

      The DSL had become unusable for an extended period for the second time in two years. The first time they sent a tech out after a short talk with tech support. It turned out it was a badly configured DSLAM. The tech took several hours to find the problem but they did find it.

      The second time it happened it took a week to get them to send someone out and then he spent about five minutes on it and pronounced it normal and left. It dropped out shortly afterwards an

    • I've been a Charter customer here in Wisconsin for over 6 years. It's for my business. Just high-speed internet, no TV or phone service. I've been quite happy with the service and reliability.

      I have DSL from our local phone company. I am less satisfied with the phone company service in terms of both reliability and service. For example, the phone company issues passwords to customers and won't let them change it. That's supposed to improve security, but it really means customers write the passwords on thei
  • So, as with most bankruptcies, the shareholders will be left with worthless paper, and Paul Allen will end up dropping from 51% to 35% ownership? I sure hope he's fronting the $8B in debt forgiveness for that new share.

    • by pandaman9000 (520981) on Saturday March 28, 2009 @01:57PM (#27371261) Homepage

      This is actually how the stock market is designed to work. As a shareholder, you are banking on a company's future success, in order to get a return on that investment.

      The unfortunate reality is that the way the market actually works, dividends paid out by holding onto shares are very small compared to the money being made by buying and selling at the best times for each. Like any other monetary investment, it helps to fully understand how the stock market works in day to day use, before diving in. I do not get involved in the stock market because of my lack of full understanding of it. I do see and understand that if you put money into most companies on the market, you should expect to cash in those stocks and switch them out at intervals. The result of bad timing is what happened to some of these Charter stock holders.

      I really feel that the stock markets give too much importance to showing profits at any cost. companies lie, and do things to get short term profits to keep their stock price supported. I often muse over whether a CEO is running a company or a stock value.

      While I am offtopic, i'll also throw in there that the media seems to rely upon the stock market for how the economy is doing. Oddly enough, the stock market is also affected by what the media's perception of current economic climate. This causes some amusing results, as a sudden spike in either feeds the other. While these spikes are limited overall, it still makes for some good entertainment while I wait to get any kind of employment.

    • by maxume (22995)

      What do you by fronting?

      Reuters has a better article stating that he will have about 3% of the equity (with the ability to purchase more) and 35% of the voting shares:

      http://www.reuters.com/article/rbssTechMediaTelecomNews/idUSN1942658120090319 [reuters.com]

      The previous structure gave him near total control of the company and much of the bank debt would become more expensive if he gave up that control. Presumably, his bonds and preferred stock are what gave him that equity, I can't imagine that any of his regular shared

    • by MrKaos (858439)

      I sure hope he's fronting the $8B in debt forgiveness for that new share.

      Maybe he will have to sell his little [wikipedia.org] boat [google.com.au] (second link is a pdf).

      I know, it's a drop in the ocean compared to the actual sums being dealt with, but to think this guy is the second richest guy in Microsoft. At least the Channel shareholders have some idea where the money goes.

      • by maxume (22995)

        When you fly your helicopter out to the yacht, you need to call ahead and ask which helipad to land on.

  • by Anonymous Coward

    It's no surprise that Charter filed, Paul Allen loaded the company with way too much debt during his poorly thought out cable acquisition spree in the early part of this decade. Just look at their footprint, there is no geographic rhyme or reason to it. That has hamstrung the company's operations (any free cash has to go to debt service, instead of investing in cable infrastructure). As a result, Charter is way behind upgrading its network, as any customer of theirs knows. It's no problem for a monopoly, bu

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