(FROM THE WALL STREET JOURNAL 5/27/15)
By Joe Flint
Two years ago, Charter Communications Inc. Chief Executive Tom
Rutledge predicted that the cable business would soon be down to
two big players. Now, he's in line to run one of them.
Mr. Rutledge will be the chairman and CEO of the new U.S. cable
giant that results from Charter's planned $55 billion acquisition
of Time Warner Cable Inc. and $10.4 billion merger with Bright
House Networks.
The 61-year-old will get a huge elevation in responsibilities.
Through the deals, Charter's base of customers will grow from about
6 million to 24 million customers -- making it second only to
Comcast Corp. in cable TV and broadband access.
The Time Warner Cable deal is also a personal triumph for Mr.
Rutledge. His career started in 1977 at Time Warner Cable's
predecessor, American Television & Communications, and he rose
up the ranks to become president of Time Warner Cable.
However, in 2001 he left the company during a management
realignment and became chief operating officer of Cablevision
Systems Corp. He spent almost a decade at Cablevision before
clashing with Cablevision CEO James Dolan, and he joined Charter in
January of 2012.
Mr. Rutledge has gotten high marks from industry executives for
staying on top of new technologies. At Cablevision, he championed
the cloud-based digital video recorder, which allows programming to
be recorded and stored remotely. He was an early backer of cable
companies building networks of Wi-Fi hot spots for broadband
subscribers. Still, some industry executives said he underinvested
at Cablevision in cable broadband and customer service.
Under Mr. Rutledge, Charter stock more than tripled to $179.78
as of Tuesday's close. Revenue grew from $1.83 billion in Mr.
Rutledge's first quarter with the company to $2.4 billion in the
first quarter of 2015. Cash flow went from $652 million to $800
million during that same time. For the first quarter of this year,
the company had a net loss of $81 million.
Charter's ambitions in U.S. consolidation trace back to the
investment by cable mogul John Malone in the company in 2013. When
Mr. Malone first talked to Mr. Rutledge about investing in Charter,
Mr. Rutledge said he explained a vision of how cable operators
could claw back market share from competitors by offering better
products and service, upgrading cable systems to digital
transmission from analog and boosting Internet speeds. He told Mr.
Malone Time Warner Cable was "an opportunity to take that vision"
and bring it to life.
Actually trying to buy Time Warner Cable took extreme patience.
Charter's approaches in 2013 were rebuffed. Then, to add injury to
insult, Comcast swooped in with its own $45.2 billion offer.
Fortunately for Charter, the blowback from regulators was so
intense that Comcast ended up terminating its proposed deal with
Time Warner Cable last month.
As for Time Warner Cable CEO Rob Marcus, who would have had been
in line for a big compensation package if the Comcast deal had gone
through, he is once again on the verge of a handsome payout. The
value of Mr. Marcus's exit package should he leave within two years
of a change in control will be around $97 million, according to an
analysis of his employment agreement by Mark Reilly, head of
executive compensation practice for Verisight Inc., a human
resources consultancy. The analysis was conducted at the request of
The Wall Street Journal. To be sure, the parties could reach a
settlement with different terms than those laid out in his
employment agreement.
Time Warner Cable declined to comment on Mr. Marcus's exit
package.
---
Shalini Ramachandran contributed to this article.
Access Investor Kit for Charter Communications, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US16117M3051
Access Investor Kit for Time Warner Cable, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US88732J2078
Subscribe to WSJ: http://online.wsj.com?mod=djnwires