SEC Settles Charter Communications Probe
The Securities and Exchange Commission on Tuesday settled its 18-month investigation into how Charter Communications Inc., the nation’s third-largest cable operator, counts its customers.
Charter, controlled by Microsoft Corp. co-founder Paul Allen, neither admitted nor denied any wrongdoing. Charter was not fined as part of the settlement and agreed not to violate U.S. securities laws in the future.
The settlement closes one chapter in a federal probe into the accounting practices of St. Louis-based Charter, which serves about 500,000 cable customers in the Los Angeles region, including in Pasadena, Burbank and Malibu.
Still pending is a criminal investigation by the Justice Department into the company’s accounting practices during 2000 and 2001. A year ago, four former officers of the company were indicted by a federal grand jury in connection with the Justice Department probe.
Neither Charter nor any current officers or directors are targets of the department’s inquiry.
Charter fired Arthur Andersen as its accountant in 2002 and restated its financial results for 2000 and 2001 after they were re-audited by its new firm, KPMG.
Charter has since brought in new top management and has recently refinanced its heavy debt load of about $18 billion.
The federal accounting probes and heavy debt have weakened Charter’s stock.
In 2001, Charter traded as high as $24.35 a share. On Tuesday, Charter was up 16 cents at $3.23 on Nasdaq.
Cable executives say that accounting irregularities at both Charter and Adelphia Communications Corp., which is now in bankruptcy reorganization, prompted a recent inquiry by the SEC into how the cable, satellite TV and telephone industries count their customers.
The SEC has sent letters to several leading companies in these industries asking for more information on these practices.
The SEC, sources say, may be looking to develop a standard policy to help investors decipher subscriber numbers these companies report to Wall Street. For instance, some cable companies have kept subscribers on the books even though they stopped paying their bills.
