Charter's 'Cinderella'9/30/2001 8:00 PM Eastern
Those who know Charter Communications Inc. president and CEO Jerry Kent were not surprised when he told his employer last Monday that he would not re-up his contract. Last Friday was his last day with the MSO.
You have to wonder why Kent — who some in the business call cable's "Cinderella on Wall Street" — would throw in the towel after such a great run.
After all, Kent's track record at Charter was impressive: He boasted an average of 17 percent cash flow growth for the past six consecutive quarters.
When the news of his resignation came last Monday, Charter's stock plunged 20 percent — from $16 to $12.81. That's about where it was mired at the close of trading last Thursday.
In the past several weeks, Kent's pals had been saying he was in the midst of contract renewal tensions. To the rest of us in the industry, it was a shocker.
In the end, it all boiled down to the fact that Kent and Charter chairman Paul Allen just didn't hit it off. On top of that, there were the horrific Sept. 11 terrorist attacks in New York and Washington. As one of Kent's friends put it, he decided that "life is too short for the aggravation."
Indeed. Running a business during the best of times is no picnic. But when world events so profoundly shake up one's reality, people can make some pretty dramatic quality-of-life decisions.
Working for Allen — the aloof and remote cofounder of Microsoft Corp. — could not have been easy for a guy like Kent, whose management style is hands-on and people-oriented. Allen, after all, only made the rounds to Charter's St. Louis headquarters for the MSO's quarterly meetings, we hear.
Instead, Kent and Allen communicated largely by electronic mail. What would one expect from the former co-founder of Microsoft, whose name frequently appears in celebrity-rag articles about those he entertains on his boat?
And that's why Wall Street is reacting so negatively to Kent's departure right now. Since his decision to bolt, Charter spinmeisters have worked overtime to put the best face on the situation.
The market was already in a nosedive over the declining global economy and the rising threat of terrorism. Now, there's Kent's departure.
First, Charter had to respond to consumer press accounts that alleged that Kent's departure was about him and Allen being at odds over the company's investments in overbuilder RCN Corp. There were also reports that Kent and Allen were at war over whether to chase AT&T Broadband. Kent himself told us that was all untrue.
Then, trying to keep some semblance of business as usual, Charter issued another press release last Wednesday, saying it had signed up actor and comic Dan Aykroyd to pitch the MSO's digital platform in a new consumer-advertising campaign.
Neither of those announcements helped Charter's stock price. The next day, Charter issued another release that basically said it secured another $100 million to increase its existing credit facilities, and that should "reinforce the banking community's confidence in Charter." That announcement left Wall Street unimpressed, and the stock sat at where it's been since Kent's departure — way down in the $12 range.
So what will it take for Charter to once again become the darling of Wall Street? The MSO needs another Cinderella to show investors what a great a company it really is. That will take an executive of Kent's caliber, a guy who integrated 14 disparate companies into one smooth-running machine.
The good news is that Kent did not have a noncompete clause in his contract, so he's free to help out some other ailing MSO. We at Multichannel News
are rooting for him to stay the course with cable.
This industry needs more straight talkers like Kent to get it through some difficult times.