Cable Operators

An 'Excellent' Prospect?

3/06/2005 7:00 PM Eastern

Charter Communications Inc. interim CEO Robert May publicly downplays any desire to be the MSO's permanent chief, but his actions are putting that enthusiasm on display for him.

Discussing Charter's fourth-quarter results on a conference call, May said last week he's intent on improving customer service and has given little thought to becoming permanent CEO.

“I'm focused on working on the issues currently at hand,” May said. “Later on down the road, I will examine that question.”

May, a Charter director, became interim CEO after Carl Vogel resigned in January, a year before Vogel's employment contract was set to expire.

May started on Jan. 17 and immediately immersed himself in Charter's operations, visiting several field offices and sounding less like a place-warmer for a permanent CEO than a candidate for the job himself.

In just the past month May has initiated a new customer-service initiative called “Focus on Excellence,” and interviewed several candidates for the vacant chief operating officer and chief financial officer jobs.

On the conference call, May said he expects to hire a CFO by the end of the month — interim co-CFO Derek Chang said last week he will leave in April. A new COO could be hired by the end of April, May said.

May was chief operating officer of Cablevision Systems Corp. from 1996 to 1998 and was named interim CEO of HealthSouth Corp. in March 2003 after that company was embroiled in an accounting scandal, from which the health-care provider has recovered. He's still HealthSouth non-executive chairman.

In one Charter internal memo, May started off by stating “how pleased and excited I am to be your interim president and CEO,” later explaining that he has met with Charter's senior management to go over the 2005 business plan and the MSO's goals and priorities going forward.

“As a team, we all came away with increased confidence we're on target to bolster our customer-care, operating and financial performance to position the business for long-term success,” May wrote. “We also identified some areas where additional focus is needed.”

Three immediate priorities: To create a customer excellence culture resulting in Charter becoming the preferred service provider for video, data, and voice services; to execute on the '05 budget plan commitments; to develop programs that will recognize and reward employees in support of our priorities.

'FOCUS ON EXCELLENCE'

May's new customer care initiative, “Focus on Excellence,” centers on four key themes: delivering superior service through customer care; delivering superior service in technical operations and network maintenance; prioritizing resources to invest for growth and selling Charter's value proposition to customers.

May said on the call that Focus on Excellence embraces several separate projects, including some that have already been launched, such as saves and new sale performance; field service and network maintenance optimization; call center workforce management; price plan migration and inventory management.

May called it his mission to make Charter the premier provider of in-home entertainment and communications in every market it serves. He said he has a plan to execute that strategy: building up staffing levels in certain markets, providing more training and resources to customer-care facilities and monitoring Charter's plant to help reduce service interruptions.

RECORD SUB LOSS

Despite his evident enthusiasm and passion for the job, May has his work cut out for him.

Charter reported better financial results than expected in the fourth quarter — cash flow rose 11% to $512 million on a revenue gain of 9% — but net subscriber losses (83,100) far exceeded expectations.

It was the single-largest quarter of subscriber losses in Charter history and pushed total basic customer defections to 209,000 subscribers for the full year. Most analysts had expected basic subscriber losses to be about 50,000 in the quarter.

Charter also lost about 14,000 digital subscribers but gained 65,000 high-speed data customers.

On the conference call with analysts to discuss fourth quarter results, May said the subscriber losses were unacceptable, but that the company had plans in place to reverse that trend.

Charter also said it will focus more on high-end, high-margin and low-churn customers, mainly by offering several different bundles of advanced products.