Charter Communications Q3 loss widens

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ST. LOUIS -- Shares of the cable TV company Charter Communications dropped by a third Thursday after the company reported a huge third-quarter loss that was worse than expected.

The suburban St. Louis-based company, controlled by Microsoft co-founder Paul Allen, blamed the loss on higher expansion and programming costs for its telephone and digital services.

Charter lost $407 million, or $1.10 per share, compared with a loss of $133 million, or 41 cents per share in the prior year. The year-ago results also reflect a gain of $128 million from a debt exchange and $200 million in net income from operations that have been divested.

Quarterly revenue jumped 10% to $1.53 billion, from $1.39 billion in the third quarter of 2006, driven by telephone and high-speed Internet sales.

Analysts surveyed by Thomson Financial forecast third-quarter loss of 89 cents on revenue of $1.53 billion.

Shares fell 61 cents, about 34%, to $1.17.

Average revenue per customer grew 13%, driven by advanced services and upgrading customers to higher Internet speeds and programming tiers.

Cable companies report revenue generating units, or RGUs, as a measure of the number of services subscribed to, so three homes that each subscribe to cable and Internet services are counted as six RGUs.

Charter said it added a net 130,000 RGUs in the third quarter and has added nearly 630,000 for the year. Charter now serves about 5.3 million analog video, 2.9 million digital video, 2.6 million high-speed Internet and 802,600 telephone customers.

"We're taking steps to regain momentum, and in fact we saw a rebound of RGU trends through the quarter," Neil Smit, Charter's president and chief executive officer, said during a conference call. He said the majority of gains were in September, the final month of the quarter.

The biggest growth has been in telephone customers. The company added 102,300 in the third quarter and has added 356,800 for the year. The number of telephone customers has more than doubled since the third quarter of 2006.

Digital video customers increased by about 15,800 in the third quarter, but that was more than offset by the loss of about 40,200 analog video customers.

Operating expenses jumped 10%, due to annual programming rate increases and the growth of the company's telephone business and other advanced services.
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