Charter Exec Discusses "New Labor Force" After 3-Way Merger
Charter rebranded as Spectrum in May and has been standardizing operations across its various businesses.
Four months after its merger with rivals Time Warner Cable and Bright House Networks, Charter Communications is signaling that some major restructuring is underway at the new tripartite cable company.
Speaking Tuesday morning at an investor conference, Charter finance chief Christopher Winfrey talked about the many "synergies" the Stamford, Conn.-based cable provider is now pondering, a term that's usually a euphemism for layoffs after an acquisition but that also can refer to areas of redoubled investment in a company's business plan.
In the case of Charter, which rebranded as Spectrum in May and is seeking to standardize operations across its component businesses, it's almost certainly the latter scenario.
The process "includes hiring up a workforce that's in the U.S., that's your own employees, training those employees, and in parallel, maintaining your outsourced activity," Winfrey said at the Deutsche Bank Leveraged Finance Conference in Scottsdale, Ariz. "We have to invest in facilities, tools, trucks, test equipment, which is our own, as opposed to contract labor.
"It takes time for that new labor force to be productive," the exec added, warning that "a period of inefficiency" would precede any gains realized from bringing the businesses together and making their services more coherent.
Labor and day-to-day operations aren't the only areas where Charter is banking on increased efficiency. Programming costs, logistics, marketing spend and general corporate overhead are all expected to drop, Winfrey said.
"There is some debate around the programming, all of which we expected," he noted. "I'm not sure it's in our best interest to get into the details around the programming."
At an investor conference earlier in the month, Charter CEO Tom Rutledge said OTT and VOD streaming services weren't a serious threat to the cable business despite the subscriber losses that have affected companies from Time Warner to Disney.
"I don't think of Netflix as a substitute for what we sell," Rutledge told investors. "I see it as more of an ancillary service. We're trying to put things like Netflix and Hulu into our services. We want to integrate it all."
Charter shares are up more than 21 percent, from $227 to $276, since the transaction completed on May 18. The company is now valued at almost $75 billion, trading at a price-to-earnings ratio of around 12.