Cable Company Charter Communications Goes Bankrupt
Cable companies are some of the most profitable companies around. The news that Charter Communications has filed bankruptcy is simply shocking.
Charter Communications is the fourth biggest cable company in the United States. It has over five million customers. Despite this, the company has been leveraged to the hilt and run into problems because it cannot refinance its debt. How much debt? How about 21 billion dollars!
How amazing is this bankruptcy? Well, consider how cable companies work. Generally speaking, they have a monopoly. Most areas have one cable company per geographic area. If you want cable television and internet, you really only have one choice. The only alternative is to go with a satellite provider like DirecTV or Dish Network. While those companies have large signup numbers, cable companies are still in great positions.
The Chapter 11 filing of Charter Communications is designed to cut debt. The company reported 21 billion in debts. It hopes to renegotiate the debt with banks and cut it down to 13 billion dollars or so before coming back out of bankruptcy. Will this be passed on to customers in rate cuts? Don’t you believe it!
Cable companies are cash cows. You have to be a complete buffoon to run one in to the ground. For Charter Communications to rack up so much debt is simply staggering. Unfortunately, it will be a cold day in hell before another cable company is able to compete with Charter in its areas. That means no relief for customers.