It’s fair to say that the economy is still in the crapper. Why, they’ve already boarded up the Virgin Megastore in my community, the Circuit City is holding a ‘going out of business’ sale, and the Steve & Barry’s has already been long gone. (Just when I was about to get my own Starbury’s, too.)
And I refuse to check the status of my 401K & IRA statements, knowing full well that my accounts are dwindling down like the attendance at Memphis Grizzlies games. But I guess it could be worse. It’s not as if I’m Seattle Seahawks owner Paul Allen, and I just lost seven billion dollars.
The AP (via the MPLS. STAR TRIBUNE) informs us that Allen’s $7 billion short-changing is courtesy of Charter Communications, the cable company the Microsoft co-founder has a 51 percent ownership stake in. Turns out the cable TV provider has not posted a profit since 1999, and it’s stock price, which had reached as high as $27.75, is currently down to $.08 a share. Yes - eight cents.
How did this happen? By taking on the debt of other companies Charter had acquired during the last decade or so. And the high interest on those debts didn’t help matters, either, as most of the company’s earnings were “wiped out” by those interest payments.
Allen & Charter just couldn’t stop with their shopping sprees, so they had to come up with some original accounting:
To deal with all its borrowings, Charter developed an unusual “wedding cake” structure, with layers of holding companies that each took on debt at varying interest rates to keep Charter itself liquid. Otherwise, the company would have defaulted on loans years ago, said Russ Solomon, an analyst with Moody’s Investors Service.
Seems like the wedding cake has turned stale. So don’t be surprised, Seahawks fans, if your PSLs for next season go up by a thousand dollars or 2 or 3 or 100. Or if your cable bill hits quadruple digits per month.