10-K Reveals Inside Deals - Multichannel

10-K Reveals Inside Deals

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Charter Communications Inc.'s 10-K, filed last Tuesday, revealed several transactions with former employees and some with companies in which its chairman Paul Allen holds an interest that could be considered questionable.

Revelations in the 10-K include some instances where Allen appeared to drive money into some of his personal holdings:

  • Charter paid interactive television service provider Digeo Inc. (49-percent owned by Vulcan) $3 million in 2002 as part of a carriage agreement, even though the MSO derived no revenue from Digeo;
  • Allen's Action Sports Network — the Portland, Ore., regional sports network that shut down last year after failing to land carriage from AT&T Broadband — got $1 million from Charter. So did Allen's National Basketball Association franchise, the Portland Trail Blazers, for its games;
  • Oxygen network (31 percent owned by Allen) received $6 million from Charter in 2002 for a carriage deal and paid Charter $2 million for marketing support.

Charter also said in the 10-K that it had paid former senior vice president of operations for the eastern region David McCall $117,600 in 2002 as part of a lease agreement to a partnership controlled by the executive.

And Charter paid $3 million to a construction company owned by McCall's son and $644,800 to a construction company owned by McCall's brother. David McCall resigned from Charter in January.

But for the most part, the 10-K contained no surprises. Revenue and cash-flow results – up 15 percent and 16 percent, respectively – were virtually identical to unaudited results released by Charter on March 31.

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