By Joe Flint
Two years ago, Charter Communications Inc. Chief Executive Tom
Rutledge predicted that the cable business would soon be down to
two big players. Now, he's in line to run one of them.
Mr. Rutledge will be the chairman and CEO of the new U.S. cable
giant that results from Charter's planned $55 billion acquisition
of Time Warner Cable Inc. and $10.4 billion merger with Bright
House Networks.
The 61-year-old will get a huge elevation in responsibilities.
Through the deals, Charter's base of customers will grow from about
6 million to 24 million customers--making it second only to Comcast
Corp. in cable TV and broadband access.
The Time Warner Cable deal is also a personal triumph for Mr.
Rutledge. His career started in 1977 at Time Warner Cable's
predecessor, American Television & Communications, and he rose
up the ranks to become president of Time Warner Cable.
However, in 2001 he left the company during a management
realignment and became chief operating officer of Cablevision
Systems Corp. He spent almost a decade at Cablevision before
clashing with Cablevision CEO James Dolan, and he joined Charter in
January of 2012.
Mr. Rutledge has gotten high marks from industry executives for
staying on top of new technologies. At Cablevision, he championed
the cloud-based digital video recorder, which allows programming to
be recorded and stored remotely. He was an early backer of cable
companies building networks of Wi-Fi hot spots for broadband
subscribers.
Still, some industry executives said he underinvested at
Cablevision in cable broadband and customer service, which helped
lead to a poor showing for Cablevision on a Federal Communications
Commission report in 2011 measuring Internet performance.
Under Mr. Rutledge, Charter stock more than tripled from $57.46
when he started to $179.78 as of Tuesday's close. Revenue grew from
$1.83 billion in Mr. Rutledge's first quarter with the company to
$2.4 billion in the first quarter of 2015. Cash flow went from $652
million to $800 million during that same time. For the first
quarter of this year, the company had a net loss of $81
million.
Charter's ambitions in U.S. consolidation trace back to the
investment by cable mogul John Malone in the company in 2013. When
Mr. Malone first talked to Mr. Rutledge about investing in Charter,
Mr. Rutledge said he explained a vision of how cable operators
could claw back market share from competitors by offering better
products and service, upgrading cable systems to digital
transmission from analog and boosting Internet speeds. He told Mr.
Malone that Time Warner Cable was "an opportunity to take that
vision" and bring it to life.
Actually trying to buy Time Warner Cable has taken extreme
patience. Charter's approaches in 2013 were rebuffed. Then, to add
injury to insult, Comcast--with whom Charter had talked about
teaming up on a bid for Time Warner Cable--swooped in with its own
$45.2 billion offer. Fortunately for Charter, the blowback from
regulators was so intense that Comcast ended up terminating its
proposed deal with Time Warner Cable last month.
As for Time Warner Cable CEO Rob Marcus, who would have had been
in line for a big compensation package if the Comcast deal had gone
through, he is once again on the verge of a handsome payout.
The value of Mr. Marcus's exit package should he leave within
two years of a change in control will be around $97 million,
according to an analysis of his employment agreement by Mark
Reilly, head of executive compensation practice for Verisight Inc.,
a human resources consultancy. The analysis was conducted at the
request of The Wall Street Journal. To be sure, the parties could
reach a settlement with different terms than those laid out in his
employment agreement.
Time Warner Cable declined to comment on Mr. Marcus's exit
package.
Mr. Marcus took over as CEO of Time Warner Cable in 2014 for TWC
Chief Executive Glenn Britt, who retired and has since died. Mr.
Britt had been reluctant to sell Time Warner Cable to Charter
during his tenure at the top of the company.
Shalini Ramachandran contributed to this article.
Write to Joe Flint at joe.flint@wsj.com
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