Charter Eyes AOL Exec

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After nearly eight months of searching, Charter Communications Inc. is close to selecting a new CEO, and sources said last week the front-runner is an executive from outside the cable industry: Neil Smit, president of America Online Inc.’s Access Business division.

Charter began an extensive search for a new chief immediately after former CEO Carl Vogel resigned in January, following clashes with chairman and principal owner Paul Allen. It hired Los Angeles-based executive search firm Korn/Ferry International to interview candidates.

Last week the rumor mill was hot and heavy that Charter was close to naming a new CEO.

But during its Aug. 2 conference call with analysts to discuss its second-quarter financial results, interim president and CEO Bob May said the search for a CEO — as well as a CFO, general counsel and chief marketing officer — was continuing.

“We’re especially pleased with the caliber of individuals we’re considering for these open positions,” May said on the call.

TIMING UNCLEAR

It is still unclear if Smit will be the final selection or what the timing of his appointment will be. But sources familiar with the situation said that for the moment, Smit is at the top of the list.

Charter spokesman Dave Andersen declined comment.

“The search for a president and CEO is being conducted by a special committee of the Charter board,” Andersen said. “They have no time frame to fill this position, and don’t provide updates relative to this search.”

Smit did not return a call for comment.

But several sources in the investment and cable operations community said last week that Smit was the leading candidate.

According to one source, a number of people have been interviewed and considered for the CEO job with “a wide range of experience.”

A former Navy SEAL (he reached the rank of Lieutenant Commander), Smit joined AOL in 2000 after 10 years in the packaged-goods industry at Nabisco and Pillsbury. He moved quickly up the ranks at AOL. Smit has served as chief operating officer of AOL Local, managing all aspects of programming and technology for the group, which comprises DigitalCity, MapQuest, and Moviefone. He later became executive vice president of member development, overseeing retention marketing, customer service, new revenue and renewal/payment marketing.

He was named president of the Access Business division in 2004 and is responsible for overseeing the company’s Internet access services including AOL, CompuServe, Netscape ISP, and AOL Latino.

Smit also is no stranger to at least one member of Charter’s board of directors. Charter director Lance Conn, now executive vice president of investment management at Vulcan Inc. (Allen’s personal investment vehicle), had held several senior management positions at AOL from 1996 to 2003.

“It’s very likely that Lance was the one who brought Neil in,” said a former colleague of Smit’s who asked not to be named.

According to former colleagues, Smit was responsible for revamping AOL’s customer-service unit about three years ago. At the time, AOL was getting poor marks for the way it handled service calls and for “jamming” customers that had tried to cancel service.

“Neil went in there and bottoms up not only fixed the operations themselves but provided a new incentive scheme, retrained employees, got rid of the bad ones, brought in new ones. He completely overhauled the customer-service operation domestically and globally for AOL,” said the former colleague.

The former colleague added that Smit has a keen eye for marketing as well as keeping costs down.

“I would say he’s up to the task because he’s done similar work elsewhere,” said the former colleague. “This is just a bigger stage with probably a greater financial incentive.”

KNACK WITH TURNAROUNDS

While at first blush Smit would seem an odd choice to run Charter (he has no cable operations experience and Charter is in desperate need of an operations leader), former colleagues said that he is a smart, capable executive with a knack for turning around difficult situations. That should make him feel at home at Charter.

Charter has been plagued by its heavy debt load — $19.2 billion, tops in the industry — sub-par revenue and cash flow growth and substantial basic subscriber losses (Charter has shed a total of 284,900 basic subscribers since June 30, 2003.)

According to the former colleague, it could be just that precarious situation that will attract Smit to the job.

“Nobody wanted the job that he took on when he addressed the call-center and operations issues,” the former colleague said. “That wasn’t sexy; it was so broken there were people who thought it couldn’t be fixed without some major transaction. Neil didn’t do any of that. He just kept hacking away at it until it worked well.”

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