Charter CEO’s 'Texas Two-Step'

Charter CEO Tom Rutledge may be known as a consummate cable operator, having led Cablevision Systems and Charter Communications through some rough waters, but he knows how to dance around an onerous regulatory framework as well, using something known back in his early days at Time Warner Cable as the “Texas Two-Step.” Charter agreed in May to purchase TWC in a deal valued at $78.7 billion. The transaction, which still needs approval from the Federal Communications Commission, is expected to close by the end of 2015.

Recently, Rutledge reminisced about his early career with Time Warner Cable -- his first job was with a predecessor company American Television Co. (ATC) -- and in particular, his first stint at corporate in the 1990s as a regulatory strategist. Rutledge took that job just as the 1992 Cable Act was imposed, the regulation that stymied industry investment and forced many operators to roll back rates. Rutledge said at the time the ‘92 Act was introduced he was working in Austin (TX) read the document in its entirety and “came up with an operational strategy to take the company forward.” “…And so we did a thing we called the Texas Two-Step, was the way it was named internally in Time Warner,” Rutledge said. “And it was a way of taking a la carte for some services and selling them under the rules, and at the same time being rate regulated under other parts of the rules. But it allowed us to continue to grow and fund the upgrading of the plant which we were doing then.” Whether that will work under an FCC Title II regime is anyone’s guess, but it could come in handy as the combined company moves ahead.