Funny how a $774 million loss can translate into traveling music for a CEO. Proving that cable-TV woes are global, United Pan-Europe Communications rewarded business reporters with a two-fer Tuesday: First it announced a huge loss, and later that day it reported the resignation of CEO Mark Schneider. It seems that Schneider, an American, decided it was an ideal time to return to U.S. shores.
"This is all very strange. What's going on here?" analyst Bert Siebrand said to the Wall Street Journal, speaking for head-scratchers everywhere. Quarterly sales had risen for UPC, which is either Europe's largest or second-largest cable-TV operator, depending on the outlet you read. But losses had widened to $774 million. As for departing exec Schneider, "not many investors will shed a tear," Bloomberg quoted Peter Bekius of Kempen Capital Management as saying. According to Bekius, that goes for UPC, too: "The company is just heading for the abyss."
Never far from UPC's story is the pit-bull presence of Liberty Media, which has a 43 percent stake in UPC's parent, United Globalcom. In addition to reporting the ownership stake, the New York Times' account reminded us that UPC borrowed $856 million from Liberty in May. The Guardian predicted that Liberty "could demand onerous terms and significantly increase its stake in UPC."
But so far Liberty isn't sharing its big ideas, if it has any, with reporters. Liberty CEO Dob Bennett shrugged off UPC's losses to investor skepticism. Prettying up UPC's balance sheet will take care of that, he told the Financial Times. How? That's a "work in progress," the peach paper quoted him as hedging. Add the Financial Times to the list of skeptics. It followed Bennett's claim by noting that he "was speaking as Liberty marked its freedom from AT&T by reporting a $2.1 billion loss" for the quarter. Free at last, free at last.
No time to read up on UPC today? Don't worry, because as we add up the damage - executive turmoil, deep in hock, and Liberty Media breathing down its neck - we figure we'll soon be hearing the strains of this story again.
UPC Chief Quits Amid Rising Losses and Debt
Financial Times
Schneider to Step Down as Chief Executive of UPC
Financial Times
Liberty Works to Improve UPC's Balance Sheet
Financial Times
Liberty Media suffers $2.13 billion second-quarter loss
Rocky Mountain News (Bloomberg)
Cable Provider Loses Money and Its Chief
New York Times
(Registration required.)
UPC's Chairman Schneider Resigns, After Firm Posts Loss for Quarter
The Wall Street Journal
(Paid subscription required.)
