How important was COO Tom Rutledge to Cablevision Systems? Very, according to investors. After Cablevision’s surprising announcement Thursday night that Rutledge had resigned, Cablevision stock tumbled 15% to just under $12.
Analyst David Joyce of Miller Tabak + Co. quickly downgraded Cablevision stock to Neutral from Buy and lowered his short-term target prices for the shares to $15 from $22. (Long term, he still thinks the stock should hit $30.)
“The resignation last night of well-regarded COO Tom Rutledge puts a question mark over the 4Q11 results vis-à-vis Verizon FiOS competition,” Joyce said in a research note Friday.
Craig Moffett, senior analyst at Sanford C. Bernstein, put it more strongly. “No company in our Telecom, Cable, and Satellite coverage universe is (was) as exposed to key man risk as Cablevision. Resigning COO Tom Rutledge is (was) in our view the hands-down best executive in the Industry,” Moffett wrote.
Moffett speculates about two possible reasons for Rutledge’s departure. Either he (along with John Bickham, who resigned as president of cable communications at Cablevision a few weeks ago) is headed elsewhere - possibly Charter - or Rutledge had a falling out with the Dolan family, which founded and controls the cable operator.
Moffett also notes that there has been speculation that Rutledge’s departure could put Cablevision in play, but he’s not buying it. “While the notion can’t simply be dismissed-Tom Rutledge was that important-we remain skeptics,” he wrote.