Charter CEO Still Up for 'Wisely Acquiring' Subs After Comcast-TW Cable Deal
UPDATED: Tom Rutledge says the cable operator, which swung to a profit and narrowed its video sub losses in the fourth quarter, is now "well positioned" to return to TV subscriber growth.
Charter Communications on Friday reported improved fourth-quarter subscriber trends and financials, with CEO Tom Rutledge saying the cable company remains interested in "wisely acquiring subscribers" in possible deals.
Last week, the firm lost out to Comcast as the latter announced a deal to acquire Time Warner Cable, which Charter had been stalking. Analysts have said Charter could be interested in buying at least some of the cable systems -- which total around 3 million subscribers -- that Comcast has said it plans to sell if its TWC deal is approved. It hasn't detailed which systems it will sell though.
Some analysts have also suggested that Charter could go after Cox Communications or smaller cable operators, such as Suddenlink.
Rutledge during a conference call declined to discuss specific consolidation opportunities, but said the changing landscape isn't precluding the company from pursuing them. He also said he hasn't taken a regulatory position on the Comcast-TWC deal and how it would affect Charter's competitive position.
Asked about the motivations behind Charter's hunt for Time Warner Cable, Rutledge said a deal wouldn't have "meaningfully" helped the company in terms of addressing increasing programming costs, even though it would have had a "marginal" benefit. He said other opportunities, in particular increasing the penetration of Charter services in its markets, would provide the bigger opportunity in possible acquisitions.
Charter, in which John Malone's Liberty Media owns a 27 percent stake, could also start growing its TV subscriber base in the future, Rutledge said during the conference call Friday. "We have fundamentally transformed this company" within two years, he said, adding that Charter is now "well positioned from a product and service perspective" to return to video subscriber growth, a goal that Comcast met in the latest quarter after 26 quarters of declines. He didn't detail when Charter could start posting pay TV user growth.
Asked about Netflix's claim that broadband providers, such as Verizon, are slowing Internet speeds, thereby affecting the viewing experience of its subscribers, Rutledge said: "Netflix is putting [itself] in a position to throttle [its] own network to gain sympathy." Without commenting further, he called that "an interesting approach."
Charter on Friday posted fourth-quarter earnings of $39 million, compared with a loss of $73 million in the year-ago period.
Revenue rose 5 percent to $2.1 billion adjusted for an acquisition. Charter lost 2,000 video subscribers in the latest quarter, down from a loss of 36,000 in the year-ago period. The company ended 2013 with 4.177 million video subscribers.
"The year-over-year improvement in video net adds was driven by a more competitive video product, including more HD channels, attractive packaging of advanced services, including Charter's new TV app, our transition to new selling methods, and improved service quality," the company said.
Charter also signed up 93,000 net new broadband subscribers, up from 59,000 in the year-ago period, and 56,000 telephony customers, up from 34,000.
"Our 2013 results show the early success of our strategies to drive accelerated customer growth," said Rutledge. "We now deliver a competitive, highly valuable suite of products and services to our customers, and we are beginning to execute at a high level, evidenced by improving trends through the year."
He added: "We will continue that momentum in 2014 and plan to complete our all-digital initiative this year, allowing us to deliver a superior set of services across the vast majority of our footprint. Combined with improved service capabilities and higher customer satisfaction, these strategies are expected to result in greater market share and improving cash flow per home passed as we position Charter for long-term growth and value creation."
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