Charter Communications (CHTR), the over-leveraged cable company, is down 21% today to $1.41, a new 52-week low. Not that long ago, the stock traded at $4.93.

Wall St. does not like cable companies right now. Even mega-cable company Comcast (CMCSA) is near a 52-week low. There is too much concern that satellite TV high-definition and telecom fiber-to-the-home products will steal cable subscribers.

But, Charter is much weaker than most other cable operators. It carries $19 billion in debt. At its current stock price, the company has a market cap of only $550 million.

Today Charter reported third-quarter pro forma revenues of $1.526 billion grew 11.2% year over year and actual revenue grew 9.9%, driven by significant increases in telephone and high-speed Internet revenues.

Digital video customers increased by only 15,800 in the quarter. Analog video customers decreased by approximately 40,200. Not a very good balance.

But, investors are looking beyond subscriber counts and pro forma numbers. Operating income from continuing operations increased to $107 million in the third quarter of 2007 from $66 million in the third quarter of 2006 and the net loss for the third quarter of 2007 was $407 million, or $1.10 per common share. For the third quarter of 2006, Charter reported a net loss of $133 million and loss per common share of $0.41.

The number that scares shareholder is the $453 million in interest expense. That is an awful lot for a company that reported only $210 million in cash flow.

Charter is in real trouble now. Billionaire Paul Allen controls the company. And it is going to cost him some real dough to get out of this.

Douglas A. McIntyre

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