Cable company may file for bankruptcy

Cable industry observers anticipate St. Louis-based Charter Communications could file for bankruptcy as early as this week, according to published reports.

Although such a move won't have immediate impact, it could lead to changes in the long-term for the 50,000 Southern Oregon cable television and high-speed Internet customers.

Charter Communications, controlled by Paul Allen, the co-founder of Microsoft Corp., failed to pay about $73.7 million in interest fees due Jan. 15. The company had 30 days from that date to make good on the payments or risk default. Bloomberg reported Charter has sold about $16.4 billion of U.S. high-yield bonds since 1999, the most of any company.

The financial media company said Charter hired law firm Kirkland & Ellis and investment bank Lazard Ltd. to advise on a possible bankruptcy. A Chapter 11 protection filing would allow the company to continue operations, under court supervision.

Charter said Thursday it was working with bondholders on financial alternatives after missing the interest payment. The company has more than $20 billion in debt, leading Moody's Investors Service to predict bankruptcy is likely unless the debt is restructured.

Allen has held a controlling stake since 1998 in the company, whose stock has fallen from $1.68 a year ago to 10 cents on Tuesday. The company lost almost $1 billion through the first three quarters of 2008. The company last week said it had more than $900 million of cash on hand and cash equivalents to pay operating costs and expenses.

In addition to the customers, several Southern Oregon cities receive monthly franchise fee checks from Charter and local television station signals are carried via its fiber optics.

"My experience has been in the case of a cable system of this size, some other company or individual would come in and purchase all or part of that system," said Kingsley Kelley, vice president and general manager of CBS affiliate KTVL. "It seems unlikely service would be disrupted to local subscribers."

If that scenario played out, Philadelphia-based Comcast Corp., the nation's biggest cable provider, would be a likely candidate to purchase Charter's Oregon holdings. Comcast already operates in Portland, Salem, Eugene and the northern Oregon Coast.

Medford City Attorney John Huttl said the city's franchise agreement with Charter is flexible and allows for reorganization and continuing operations. He said he couldn't comment on the matter, however, until he saw a proposed plan.

Charter has about 5 million subscribers in 28 states. Reuters reported the firm's debt load is about $4,000 per subscriber. As a result, the company is not an attractive acquisition target.

Richard Ryan, whose Hunter Communications firm provides business Internet and telephone service in the region, said Charter's debt also keeps it from keeping pace with technological advances.

"There is already a fairly good migration to satellite providers in the community," Ryan said. "The only way Charter is going to improve or upgrade is through a capital influx or (to) pay off debt. This could be an opportunity for another service provider to come in and purchase assets of the company. Charter is on life support."

Reach reporter Greg Stiles at 776-4463 or e-mail

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