Charter execs defend accounting, operations

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Charter Communications Inc. executives defended the company Tuesday, saying
growth remains their greatest strength.

The MSO joined Cox Communication Inc., Insight Communications Co. and Comcast
Corp. in posting strong cash-flow growth for the second quarter (ended June 30),
a 14 percent gain on revenues that also grew 14 percent.

That's dramatic growth in an economy where many media companies more
dependent on ad sales are suffering huge declines in revenues and earnings.

But investors are treating Charter as if it were on the verge of Chapter 11,
with its stock down to $3 and many bonds trading at 50 cents on the dollar.

"Trading at a near-bankrupt level, that, I don't understand," said CEO Carl
Vogel in an interview.

But in the wake of the scandal at Adelphia Communications Corp., investors
are asking questions about the way Charter counts subscribers and how it treats
certain labor costs associated with the installation of new services in
customers homes.

On a conference call with analysts Thursday, Vogel insisted nothing is
improper.

"Simply put, the numbers we've reported are correct in all material respects,
and a proper reflection of the economics of our company. Our accounting methods
and disclosures provide a clear picture of our company, its financial condition
and the assumptions underlying our financial presentations," he said.

Vogel acknowledged a report in Broadcasting & Cable two weeks ago
that Charter was looking to sell systems serving about 600,000 small-town subs
and was seeking about $1.8 billion. But he said in an interview that he's under
no pressure to sell and won't unless he gets offers of 11-13 times cash flow for
the systems.

Vogel added that he has not discussed any deals with multibillionaire
chairman Paul Allen about restructuring the company's finances.

With Charter's debt trading so low, investment bankers are peppering Allen's
Vulcan Ventures with proposals to buy up the bonds at a discount and trade them
to Charter for more equity, which could dramatically improve Charter's balance
sheet and, hence, the value of the its stock. "You'll have to talk to Vulcan,"
Vogel said, when asked what Allen might be planning.

But Vogel said that while he's tempted to pull the same trick, using
Charter's $2.3 billion in available bank lines to buy in bonds at a discount, he
won't do it out of concern that the bank markets will remain rocky and Charter
couldn't borrow more cash if it needed to.

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