It’s trite but in this case quite true: Cablevision’s loss is Charter’s gain. Tom Rutledge, the deft cable operator who abruptly left Cablevision (NYSE: CVC) late last week, will head St. Louis-based Charter (NSDQ: CHTR) — opting to run his own shop rather than continue the delicate balancing act of running the telecom operations of a public company controlled by the Dolan family.
With James Dolan as CEO, Rutledge, who had been president of Time Warner Cable (NYSE: TWC) before joining Cablevision in 2002, had two options at Cablevision — accept that COO was as high as it goes or leave. (No option available like the Steve Burke play at Roberts-controlled Comcast (NSDQ: CMCSA) — buying NBC Universal.) He has been COO since 2004, overseeing local, which includes Newsday and News 12 Networks, Cablevision Media Sales, and Rainbow Networks before it spun off to become AMC Networks.
Analysts and investors like Rutledge; BernsteinResearch’s Craig Moffett called him “the hands-down best executive in the industry.” As the WSJ’s Shira Ovide noted, the company lost $505 million in market cap in heavy trading the morning after Rutledge’s resignation was announced and closed down nearly 9 percent at $12.75. It gained back a little ground, closing Monday at $13.
But Cablevision’s share price has been dropping for months over concerns that the broadband-and-digital voice-fueled growth has plateaued and its vulnerability to competitor Verizon FiOS. Rutledge’s resignation, preceded by cable head John Bickham, adds to those concerns. Cablevision is looking for someone to head the cable operations but not for a Rutledge successor as COO.
Ovide also mentioned how relieved Rutledge must be to not to have to commute by helicopter to Cablevision HQ on Long Island anymore. Now, though, he’ll be commuting to suburban St. Louis, where Charter is headquartered. Not to worry, though — the intricate employment agreement filed today with the SEC includes commuting costs and travel on the company jet.
Now controlled by private equity firms Apollo Global Management and Oaktree Capital Management, Charter has its own issues. Once the linchpin of Paul Allen’s plans for a wired world, the company was over leveraged with an almost Byzantine financial structure that took bankruptcy to resolve. Neil Smit helped right the ship before leaving to run Comcast’s cable operations. His successor Michael Lovett was in place little more than a year before announcing his plans to resign. Rutledge will join the company now part time and succeed him as CEO Feb. 13.
Charter is the fourth-largest cable operator with 4.4 million basic video subscribers; Cablevision is fifth with 3.2 million.