Charter Loses 100,000 Pay TV Subs in First Quarter
The company, led by CEO Tom Rutledge, posts its latest quarterly results.
Cable operator Charter Communications, in which John Malone's Liberty Broadband owns a big stake, on Tuesday reported mixed first-quarter financials and subscriber trends.
The $55 billion acquisition of Time Warner Cable and the $10.4 billion purchase of Bright House in May of 2016 made Charter the second-biggest U.S. cable company behind Comcast.
The cable firm, led by chairman, president and CEO Tom Rutledge, lost 100,000 net residential pay TV subscribers in the first quarter, compared with a gain of 24,000 in the year-ago period on a pro forma basis. Analysts had on average forecast a drop of around 25,000, but Wells Fargo analyst Marci Ryvicker had predicted a loss of around 95,000. Management on an earnings conference call mentioned the loss of lower-end Time Warner Cable subscriptions as a key driver for the pay TV losses.
Old Charter cable systems lost 13,000 residential pay TV subscribers and former TWC systems lost 108,000, while former Bright House markets added 21,000 subscribers. In the year-ago quarter, TWC had added 21,000 residential pay TV subscribers, before the sale to Charter closed, Charter had added 10,000 and Bright House had lost 7,000.
But residential high-speed internet subscriber growth of 428,000 in the first quarter was well ahead of the Wall Street consensus of 388,000.
Rutledge said on the call that legacy Charter systems would have added pay TV subscribers if it hadn't been for the integration of the acquired companies, saying he expects to grow video subscribers ahead. He also said that Charter is looking to benefit in the future from subscriber share shifts from satellite TV companies.
The Charter CEO said the company continues to plan to launch an integration of Netflix into its user interface, adding that the company is also having similar discussions with YouTube. He didn't provide any timing details.
He said a recently announced deal with AMC Networks for exclusive content also fit into Charter's overall plan to offer great content to attract subscribers.
Rutledge on the call didn't comment on a Fox carriage dispute, citing ongoing litigation.
Charter on Tuesday reported a profit of $155 million, compared with a year-ago pro forma profit of $179 million amid higher depreciation and amortization and severance-related expense. Revenue rose 4.1 percent to $10.16 billion.
"As we near the first anniversary of the close of our transformative transactions in May of last year, the execution of our integration and operating plan remains on track," said Rutledge. "We have now launched our Spectrum pricing and packaging to nearly all of the homes we pass in our new footprint." The final launch of the uniform prices and packages across the expanded company is set for Hawaii later this quarter.
"We are already seeing the benefits of our customer-focused strategy in those markets, including greater connect volumes and the sales of higher quality products, all of which will lead to higher customer satisfaction, lower churn and faster customer and financial growth in future quarters," Rutledge said.
On an earnings conference call, he said the company was ahead of its own expectations in terms of integrating the acquisitions made last year and streamlining its service offers across all its markets.