Charter not in a buying mood

Charter Communications is caught in a paradox that makes further expansion through acquisition unlikely.

The market values its subscribers at about $2100 each – a dilemma facing most cable operators. On the other hand, Charter can’t buy subscribers at that, or even a slightly higher rates, because no one has anything for sale at those prices, CEO Carl Vogel told shareholders at the company’s annual meeting today in Seattle.

“I’d love to buy subs at $2500 a sub. The problem is, nobody’s selling at $2500 a sub because the people who are in this business--and quite frankly a fair number of private equity players--see value way beyond that,” Vogel said.

At the same time, Charter’s stock trades at levels equivalent to $2100 per sub.

“We’re all disappointed in our stock price,” Vogel said. “I think we’re trading at 6.2 times cash flow, $2100 a sub. We have tremendously more potential than that as a company.”

Charter had been considered a frontrunner to buy several key properties from bankrupt cable operator Adelphia Communications. The deal fell through, Vogel said, because “when we did the math, we didn’t feel it was appropriate to take the dilution that we felt was necessary to buy the assets and improve our balance sheet relative to the increase in the footprint.”

This doesn’t mean, given the right opportunity, something could happen in the future, but “even if we wanted to buy something at Charter, we don’t have the financial capacity to do so,” Vogel said. “That doesn’t mean we can’t figure out other ways to do it, but that is not something we are going to do.”

Vogel declined to comment on shareholder questions about whether company chairman Paul Allen, a Microsoft co-founder, would take Charter private through a buyout.